Gold isn’t exactly the most liquid market anyway, so it can be very dangerous to mess around this year unless you’re extremely careful.
Gold markets moved back and forth on Monday as it looks like we are threatening the $ 1,820 level. If we do manage to break through that level, the gold market will most likely continue to rise as it is a fairly reliable barrier of resistance over the past couple of months. If we can wipe out $ 1,820 then I expect the market will turn to the $ 1,850 level fairly quickly followed by the $ 1,875 level.
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On the other hand, if we turn around and fall below the $ 1,775 level, it could negate the attempt to break through and send that market back into the previous consolidated mess we were in. Gold is a bit finicky and messy to say the least, and it’s finally starting to look okay, but gold has horribly underperformed other inflation-linked assets lately, so you probably need to build up a position quite slowly. That way you can just add once the breakout occurs and it continues to work in your favor.
Pay attention to the US dollar index, which has a massive negative correlation with the gold market, so you need to keep an eye out for that as well, as the strengthening US dollar works against the value of gold quite easily. . That being said we are heading towards the end of the year and liquidity is going to be a major issue to say the least so we may have a sudden spike which is why you need to be careful about the size of this position. Remember, Gold isn’t exactly the most liquid market anyway, so messing around this year can be really dangerous unless you’re extremely careful. I think we’ll probably end up going upward, but the question is whether or not we need to back down a few times, or if we can just shoot straight into the air from here. It certainly looks like we are going to try and do it, but it is only when we get a daily close above that $ 1,820 level that I would be convinced that the breakout is imminent. We did almost everything we needed to take this step, so now all we need is a little bit of tracking.