Gold looks like it’s trying to bounce on Thursday, but we still face a lot of headwinds in this market, not the least of which is that traders are thinking the Fed will hike later this year.
Gold
Gold looks like it’s trying to bounce today during the Thursday session. That would, of course, make sense considering we’re right at the crucial $4,000 level. The $4,000 level is a psychologically important figure and an area that a lot of people will be watching very closely. It makes good headlines.
There is significant support, I think, extending down to roughly $3,900, so we’ll have to watch that. Breaking below there could be rather negative for Gold, opening up a drop all the way down to as low as $3,500. Right now, we have an issue because the US dollar is so strong that it’s just punishing precious metals. And of course, the war premium seems to be going away. In fact, the war did nothing but bad things for Gold as people started to bank on the idea that the US dollar was going to strengthen, and now we’re looking at the scenario through the prism of whether or not inflation is dropping off a cliff.
Macro Factors Weighing on Precious Metals
Now, as money flows into the United States, it strengthens the US dollar, and that’s kind of what you’re seeing here. But I also recognize that sooner or later, if we get a reversal in the expectations out of the Fed, then I think you have a scenario where Gold could become very bullish.
I like Gold longer term. I always have, but right now doesn’t seem to be the time to buy it. Short-term rallies, I suspect, continue to get sold into until the market starts to focus on different things. $4,200 is probably a short-term ceiling at the moment.
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Christopher Lewis is a technical analyst and market commentator at DailyForex with more than two decades of trading experience in Forex and other leveraged markets. Based in Columbus, Ohio, he specializes in chart-based analysis of major currency pairs, stock indices, commodities, and energy markets, focusing on clear support and resistance levels, trend structure, and risk management. Christopher produces daily written and video analysis for traders who rely on technical setups to navigate volatile market conditions
As seen on: Pairs Of Aces Podcast,The Trader Guy, FXEmpire