Gold Forecast: Markets Continue to Slump

It’s almost impossible to buy this market unless you can sit there and babysit the charts.

Gold markets went back and forth Friday as we continue to see a lot of noisy behavior. Ultimately, this is a market that I think will see volatility, but we are getting close to bouncing from a major support level in the form of the $1700 level. The $1700 level has been important multiple times, so bouncing from there makes quite a bit of sense. Furthermore, it is an area that I think extends down to the $1680 level, so think of it more or less as a “zone.”

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I do think that we’re probably about due for some type of bounce, but we need to see interest rates in America continue to roll over. If we do a rollover, then it’s likely that gold will benefit from this. I don’t know whether or not this is going to be a major bounce, but I think at the very least we are probably due for a little bit of an opportunity to the upside. The $1750 level is likely going to continue to be significantly resistant, and I think that signs of failure there would be a nice selling opportunity. This will be especially true if the yields in the bond market start to rise again.

If we get above there, then the $1800 level could be a large, round, psychologically significant figure, and an area where the uptrend line should come into the picture. Furthermore, the 50-day EMA is starting to reach that area as well, so all of those coming together in one spot does tell me that the $1800 level will be very difficult to recapture. That being said, it is $100 from here, so I think it’s probably very unlikely that we will see the market get there easily.

If we do break down below the $1700 level, we will more than likely drop to the $1500 level, assuming that we break through that $20 “zone of support” that I was talking about. Ultimately, the market is likely to see quite a bit of a flush lower, which would more than likely coincide with a huge spike in the value of the US dollar. It’s almost impossible to buy this market unless you can sit there and babysit the charts.

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