Gold markets got crushed on Monday as we continue to see the US dollar act like a wrecking ball against everything it touches.
If the market were to break down below the lows of the Monday session, that would indicate that more momentum has come into the marketplace as far as selling is concerned, it would be very likely that the gold market would attempt to reach the $1800 level below, which is not only a psychologically significant area but an area where we have seen a lot of action previously. The main culprit for this will be the US dollar and rising interest rates in the bond market.
As long as traders can get more return for a “risk-free asset” such as a bond, gold loses a lot of its shine. Alternatively, if we were to turn around and start to rally, it is not really until we break above the $1900 level on a daily close that I would consider a reversal in the trend. If we get that, then the market would almost certainly challenge the 50-day EMA, which is currently at the $1920 level. This would take quite a bit of effort, and more importantly, for the US dollar to suddenly stop strengthening.
As we are between the 200-day EMA and the 50-day EMA indicators, it quite often means that you are going to see a lot of choppy volatility before a bigger move appears. That makes sense because nobody knows what is going on with the economy at the moment, and all eyes are on the Federal Reserve.
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