We will find plenty of “buy on the dip” type of opportunities over the next several weeks.
Gold markets fell rather hard during the trading session on Wednesday to show signs of negativity, but we have turned around to show signs of life. In fact, we are trying to form a bit of a hammer on the daily chart, which generally means good things. The market recently had fallen hard over the last couple of sessions, but I think part of this would have simply been the fact that gold might have been short-term overbought.
The $1970 level above was previous resistance, so it will be interesting to see if it does offer resistance again. If we can break above there, then the market is likely to go looking to the $2000 level. The $2000 level course has a certain amount of psychological importance attached to it, so we could get a little bit of a pullback like we had seen the last time we get there. If we can break above the $2000 level, it is not only a psychological victory due to the large, round, psychologically significant number, but also the fact that we had formed a shooting star there.
Alternately, if we break down below the lows of the trading session on Wednesday, then it is likely that we could go to the 50 Day EMA underneath. It is currently rising from the $1925 level and should offer a certain amount of dynamic support. The market has support all the way down to the $1900 level, so as long as we can stay above there, you can still make an argument that we are still bullish. Breaking below the $1900 level would then open up the possibility of a move down to the 200 Day EMA, and then perhaps the $1800 level. I do not think that is likely to happen though, because there are so many problems when it comes to inflation and fear out there that gold will continue to attract quite a bit of attention.
I do believe that given enough time, gold markets will continue to find plenty of buyers, so therefore I think it is a situation where you will find plenty of “buy on the dip” type of opportunities over the next several weeks. At this juncture, it has been a nice pullback but it is essentially a 50% Fibonacci retracement from the latest pulse higher.