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Gold Price Forecast – Gold Markets Continue to Threaten a Breakout

Gold markets have rallied slightly during the trading session on Thursday, as we are trying to get to the $2000 level. If we can break above that level, then it’s possible that we could go looking to the $2050 level. All things being equal, this is a market that certainly looks as if it is trying to continue to go higher, but we have gotten to this area so quickly that it makes sense that we also have to work off some of the excess froth.

In general, this is a market that I think continues to be noisy, and we are essentially consolidating in the short term. Sooner or later, we will get an impulsive candlestick that tells us which direction we are going to go. The market will continue to be one you need to be very cautious about, and therefore you need to keep your position size reasonable as volatility will probably continue to be a major factor in this market.

When you look at the gold market, pay close attention to bond yields, because if they start to spike, it can put downward pressure on the gold market. Typically, people talk about the negative correlation between the US dollar and gold, but it’s actually bond yields that more likely than not will be the culprit. Higher bond yields drive the US dollar higher, all things being equal, so it all goes full-circle. I anticipate that the next couple of days will be more of the same back and forth, barring some type of sudden headline in the news.

Source: FXempire