Gold markets have rallied enough to touch the $3,500 level in Asian trading in the futures market, but we are seeing the market give back quite a bit of those gains. Quite frankly, the market is overbought and overextended. And therefore, I think we’ve got a situation where a pullback makes a lot of sense. And we are in fact already starting to see that. This doesn’t mean that I would start selling gold. I’m just saying that we probably get a pullback, which, quite frankly, should be a nice buying opportunity.
All things being equal, this is a market that I do think offers value every time it drops. And that is something that we need to pay attention to. I would be very interested in gold closer to the $3,200 level, but that means it would have to drop $300 from the peak, perhaps spooking some people. In general, this is a market that just went parabolic. And as the US dollar looks likely to recover a bit, that will certainly have an influence on gold as well.
I do believe that there’s probably further to go for gold. I just don’t think that we can keep up this type of momentum. Quite frankly, if this keeps up, something serious is going to break. I do suspect that there are plenty of people out there that have gotten more out of gold than they anticipated and are more than willing to take some of their profits here. And that’s pretty much, I think what we’re seeing. Also, one would have to assume there’s a massive options barrier somewhere close to the $3,500 level as well.
Source: Fxempire
