- The gold market has been all over the place during the month of June, as we continue to see a lot of noisy trading overall.
- That being said, it’s not a huge surprise to see a scenario where traders don’t really know where to go next, due to the fact that there are so many external factors.
- For example, we recently have had a hot war between Iran and Israel, and of course there was also the conflict in Gaza. In other words, there’s been plenty of geopolitical risks out there to continue to make gold interesting.
Furthermore, you also have to keep in mind that central banks around the world have been collecting gold for some time, and of course we have seen the US dollar soften a bit as well. With this, and the fact that simple momentum has been to the upside, it makes a lot of sense that we have seen noisy but somewhat sideways trading as we have been in consolidation over the last couple weeks, as the market has essentially gone straight up in the air since the beginning of the year.
July Could Bring More of the Same
I suspect that July could bring more of the same type of sideways action, although it seems like gold has been going sideways in this $300 range forever, the reality is that it’s only been a couple of months in what has been a very bullish market for a couple of years. As we are stuck in this $300 range, breaking out of it obviously would attract a lot of attention. I suspect it would probably break higher, but there is also the argument to be made that maybe gold needs to pull back a bit after that monster run higher.
If we do break down below the $3200 level, then it’s possible that gold could go looking to the $3000 level, where I would anticipate a lot of psychological support, especially as the 50 Week EMA is racing toward that area. On the other hand, if we break to the upside, clearing the $3500 level opens up a move to the $3800 level based on “the measured move.” All things being equal, I suspect that we probably stay range bound, but keep an eye on those levels, because it could lead the way going forward.
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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.
