Gold markets have been a little bit negative during the early part of the Tuesday session as we continue to hover around this crucial figure. $4,000 is obviously a large, round, psychologically significant level that a lot of people will be watching. It’s worth noting that the 50-day EMA sits just below the cluster that we are forming at the moment.
Ultimately, the gold market is one that has been overly bullish until recently, and now we have to ask the question of whether or not this pullback is going to be enough before we continue to go higher. Was that the end of the uptrend because of distribution and high volume? Or do we break down below the 50-day EMA and simply fall apart?
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I think the best-case scenario for bullish traders will be the fact that if gold can go sideways, traders will start to accept the idea of $4,000 as being a viable and normal price. We got to $4,400 far too quickly, and now we’re somewhat paying the price. Longer term, we still will be paying close attention to central banks around the world and interest rates.
Interest rates dropping, of course, helps the case for gold, and that is basically what has been going on for some time. With this, market participants continue to see a scenario where traders view gold as still probably bullish—but at the very least, stagnant for a while. I do not think the market is about to jump straight up in the air anytime soon.
Source: Christopher Lewis Fxempire
