Technical Analysis of the Gold Market


Gold markets have been somewhat positive in the early hours of Friday, as we continue to keep an eye on the $1950 level. The market is currently trading between the 50-day and 200-day exponential moving averages (EMAs). This usually suggests that there will be a lot of volatility, which is especially true when it comes to the gold market.

Be wary of the negative association between the US dollar and gold, because the US dollar has been quite volatile. There are several issues out there, therefore, the negative association has not always been a key influence. In actuality, the 1980s had a strong US currency as well as a strong gold price. Having said that, the correlation has recently been highly negative, so it is certainly worth paying attention to.

If the market falls below the 200-Day EMA, it is probable that it will completely collapse. This entails dancing around the $1900 level, which swiftly opens up a move down to the $1800 level. If we were to break over the 50-Day EMA, we would almost certainly challenge the psychologically crucial $2000 level, an area where one would have to think that there are a number of options expiring at various time frames in that approximate neighbourhood. Breaking through the $2000 barrier opens the door to a move to the $2050 level and beyond.

Finally, this has been a pretty choppy and slightly sideways market, albeit with a very modest upside bias. With this, I believe the market has a real possibility of continuing to rise in the long run, but it will not be an easy climb. It will require a lot of patience to realize gains in this market, albeit it appears that we are currently attempting to return to the upswing. With this, I am cautiously optimistic, but I also recognise that gold still has a long way to go.

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