- During the Wednesday session we have seen the gold market go back and forth, stabilizing after a pretty ugly Tuesday session.
- All things being equal though, this is a market that is in the middle of a larger range, so essentially, it is sitting at “fair value.”
- Furthermore, we have the 50 Day EMA sitting just below offering a bit of support, almost acting as if it is a trendline going back several months.
- With all of this put together, I think we have a situation where we have plenty of buyers underneath and we have plenty of reasons for gold to continue going higher.
External Factors for Gold
If you are trading in the gold market, you need to be very cautious with the idea of having so many external factors. After all, we have the situation in the Middle East, which has calm down, putting a little bit of negativity into the market, as the “safety trade” has ended. However, we also have to keep in mind that the situation could flare up again rather quickly, and if it does, that could be very positive for gold.
Furthermore, we also have to keep an eye on the US dollar, which is oversold, and therefore if we start to see a lot of US dollar strength, it is possible that can work against gold, unless is a massive “safety trade”, when both can rally at the same time. The other thing that comes to mind almost immediately is the fact that central banks around the world continue to add to the gold holdings, so therefore we have a huge buyer in the market at the moment.
We are currently range bound, right in the middle of the range between the $3200 level in the bottom and the $3500 level in the top, so therefore I think we are essentially going sideways in this general vicinity, but if we do sell off too much, I will be looking for a bounce that I can start buying to go with the longer-term trend.
Ready to trade our Gold forecast? We’ve shortlisted the most trusted Gold brokers in the industry for you.
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
