- Gold has gotten absolutely pummeled on Friday after the jobs report came out hotter than anticipated.
- With that being the case, I think you’ve got a situation where traders are starting to question whether or not the Federal Reserve will loosen monetary policy anytime soon.
- At this point, the Federal Funds Futures are all over the place, as traders started to price out the idea of an interest rate cut in the month of November.
Really at this point, I think it is going to be a scenario where traders continue to see a lot of volatility and I think gold has a lot of different things going on at the same time. There are obvious geopolitical concerns that come into the picture when you’re trading gold and of course there are a lot of problems in places like the Middle East, Ukraine, etc. So as long as that is a potential problem gold could very well find buyers. However, I’m paying close attention to the area between $2,300 and $2,280 below. I believe this is a significant support area, and if we can bounce from here, then gold could very well recover. However, if we break down below the $2,280 level, then I think gold is ripe for a deeper correction.
Interest Rates and the Currency Pair
Interest rates spiking of course are not helping the gold market so that is something to keep in the back of your mind. We are right around the 50-day EMA and that does typically attract a certain amount of attention, but you could also make an argument that this is a market that needs to go sideways simply just to absorb a lot of the momentum that had been part of the market getting to this level. With this I think we continue to go back and forth more likely than not and there could be value hunters trying to get involved in this market. If we can close above $2,325 then I think you will see another attempt to get to the $2,400 level.
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