Gold Price Forecast – Gold Markets Bounced From the 200-Day EMA

NEW YORK (August 17) Gold markets have rallied a bit during the trading session on Thursday, bouncing from the 200-Day EMA. Now that we are starting to show signs of life, the question is whether or not we can continue to go higher? The 50-Day EMA has a potential to be a significant resistance barrier, which is about $40 above where we are. We can break above there, then the market is likely to continue to go toward the $2000 level, which of course is a large, round, psychologically significant figure.

Underneath, if we do break down below the $1900 level, it’s likely that the market is going to continue to drop down to the $1800 level. All things being equal, this is a market that I think continues to see a lot of volatility, and of course it will have the US dollar to think about at the same time. After all, the market is likely to continue to see a lot of questions asked about the Federal Reserve, and I do think that there’s a certain amount of safety when you look at the gold market, and therefore you can see this as a situation where we may have a strong negative correlation to the US dollar sometimes, but at the same time you have to ask whether or not there will be demand for safety.

At the same time, you also have to keep in mind that the market is highly sensitive to interest rates as well, and they are somewhat elevated in the United States. After all, it’s cheaper to own bonds than it is to pay storage for gold. On the other hand, if the market were to break down below that $1900 level, it could drop rather significantly, dropping all the way down to the $1800 level and probably rather quickly. In general, I think this is a scenario where you will continue to see a lot of volatility so make sure the keep your position size reasonable, as the moves could be rather rapid, and therefore you could rack up pretty big losses in this very choppy overall market.

FXEmpire