The gold market initially did pull back just a bit during the early hours on Monday, only to turn around and show signs of life. All things being equal, when I look at this chart, I only see it as one that is building up significant pressure and this week, I think it will be released mainly due to the fact that we get CPI and PPI, both out of the United States. That’ll give us an idea of inflation. If it is lower than anticipated, that probably helps gold, but if it’s extremely high, that might hurt it. We’ll just have to wait and see.
The 50-day EMA currently resides right in the middle of the candlestick, and therefore it does make a certain amount of technical sense that we are here. But we also have to keep in mind that recently we had a very ugly candlestick about two weeks ago where we just plummeted after the Israelis and Hezbollah agreed to a ceasefire. That being said, there are plenty of worries out there when it comes to geopolitics. Syria just collapsed, for example. So, I think you’ve got a situation where buyers continue to at least keep the market somewhat elevated.
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Even if inflation ends up being toxic for gold, I don’t know if it’s going to be enough to change the trend. I just think it would more or less create a buy on the dip opportunity. If we can break above the top of that nasty candlestick from about two weeks ago, at the $2,720 region, then I think it opens up a move to the $2,800 level.
Source: Fxempire
