Gold markets pulled back slightly during the trading session on Wednesday, as we have tried to digest some of the massive gains from the previous session. This is a market that has been in and uptrend for quite some time and has been digesting those gains after breaking the $1500 level. All things been equal though, there are a lot of things out there that could continue to cause issues with risk appetite, and that continues to drive money into the gold market. Said that, central banks around the world continue to cut interest rates and of course ease monetary policy, so it makes sense that traders will go looking towards gold get away from fiat.
The 50 day EMA underneath the $1500 level should continue to offer a bit of a “floor” in the market as well. To the upside, the $1560 level continues to be short-term resistance, but if we can break above there then the measured move that is implied is for an attempt at the $1620 level above. I think we go higher than that, but that might be your short-term target after a breakout of the rectangle.
Quite frankly, it’s very unlikely that we see a break down from here, but even if we do the $1450 level would be the next support level as it is the top of an ascending triangle that sent this market higher. At this point in time, it’s very likely that the market will continue to offer a “buy on the dips” scenario.
Please let us know what you think in the comments below
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