Gold Market Technical Analysis
Gold markets got a little bit of a boost during the Friday session after the Non-Farm Payrolls announcement came out, giving us a little bit of a heads up as to what inflation might be doing. After all, if the average hourly earnings in the United States are dropping, that’s a big boost for the inflation plan, and at the same time we are seeing more jobs added then initially thought, it means that the Fed is perhaps strengthening the case for a “soft landing”, as they bring down inflation without wrecking the jobs market. While this has never been done in the past, one thing is for sure, economic action as of late has been all over the place.
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Underneath, we have the 50-Day EMA, which is a technical indicator that a lot of people will pay close attention to near the $1950 region. Just above, we have the $2000 level which could cause a significant amount of resistance, and therefore you could see a little bit of a pullback as a result. That being said, I do think that it is probably only a matter of time before we try to break through that level. If we can, then the market is likely to go looking toward the $2100 level. Underneath, if we were to break down below the 50-Day EMA, then we could drop down to the $1925 level, which also has the 200-Day EMA in that region, which also expands support all the way down to the $1900 level. In other words, I do think that the downside is somewhat limited, but at this point we also have the worry about whether or not we can break out to the upside.
Keep in mind that the bond market will be a major influence on where we go, and rising yields would be bad for gold. However, gold has seen yields fall rather drastically during the trading session on Friday, supercharging the momentum to the upside, at least in the short term. You should also keep in mind that Monday is Labor Day, so that will have a major influence on whether or not there’s going to be any liquidity. At this point, it looks like we are going to try to get to the $2000 level.
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