Gold Forecast: Markets Threatens Major Resistance

By the end of the Wednesday session, we could probably have something in the realm of clarity that we can start following for a bigger move.

• Gold markets rallied a bit Tuesday as we wait for the crucial CPI numbers.
• CPI will come out on Wednesday, and it could have a major influence on what the Federal Reserve does next, as Wall Street ways to see whether or not it gets cheap or free money.

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The 50-day EMA sits just below current trading, and therefore it’s potentially a short-term support level. If we break down below the 50 Day EMA, then it’s possible that we could go looking to the $1750 level. That’s an area where we had seen previous resistance, and it’s likely that could come in and offer a bit of “market memory” and make the market react to it.

If we break out above the $1815 level, then it’s possible that the market could go looking to reach the 200 Day EMA which is near the $1850 level. The 200 Day EMA of course would cause quite a bit of resistance, so breaking above that would kick off a lot of algorithmic trading. I think the only thing that you can count on now is going to be a lot of noisy behavior though, so given enough time I think that this is a market that needs to make a bigger move.

Waiting for CPI Numbers

The CPI numbers coming out hotter than anticipated will have people freaking out, running to the US dollar as the Federal Reserve will have to become much tighter and more aggressive with its monetary policy. Quite frankly, the Federal Reserve keeps telling everybody that it is going to be tighter and more aggressive, and therefore it’s a bit surprising that the market is trying to argue the point. However, this is a market that I think given enough time will either start to fall toward the low again or perhaps break above that crucial 200 Day EMA. By the end of the Wednesday session, we could probably have something in the realm of clarity that we can start following for a bigger move. I think that the real signal is probably at the end of the day on Wednesday. Between now and then, it’s going to be nothing but a lot of choppiness and sideways behavior. The market being between the 50 Day EMA and the 200 Day EMA suggests that we are getting a lot of crosscurrents at the same time.

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