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The gold markets have rallied rather significantly during the trading session on Thursday as we gapped higher and then went looking to reach the $1950 level. It does look as if it is probably only a matter of time before we break out above there, but in the short term, we may get a small pullback in order to pick up enough momentum to go higher.
The gold market had launched itself into a parabolic move a couple of weeks ago and has since absolutely broken back down to wipe out that move. I think this is simply a continuation of the overall trend, so we will have to wait and see whether or not we can break above the small gap that sits right around the $1950 level, because if we do then there is no reason to think that we will struggle to get to the $2000 level over the next couple of weeks. Simply put, I believe that gold is a market that got out of hand there for a while, and now is starting to focus on the longer-term trend again.
Underneath, I see the 50 Day EMA at the $1890 level as significant support, right along with the $1880 level as long as we can stay above all of that, then the market will more than likely find buyers every time we dip. However, if we were to break down below the $1880 level, then it is possible that we could break down rather significantly. I would anticipate that the market goes looking towards the 200 Day EMA. The market would more than likely may try to find buyers again but a lot of this will come down to inflation expectations and of course whether or not the world is a safe place so to speak.
I do believe that it is only a matter of time before we would see volatility pick back up, but I still think that gold more than likely will go higher so therefore I am bullish on this market now that we have saved the overall trend at the crucial area that I have marked on the chart. I also recognize that it is going to be very noisy and volatile, so building your position up slowly makes the most sense.
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