Gold markets have rallied during the trading session on Wednesday to reach higher and fill the gap from the open on Tuesday. The market looks very likely to pull back in the short term, as it typically means that you will find a bit of resistance. Now that the gap has been filled, we can start to speculate on the overall attitude of the market.
The 50 Day EMA has offered support, even as we pierced it during the trading session on Tuesday. Now that we have seen quite a bit of bullish pressure during Wednesday, it does suggest that we are going to make an attempt to break out to the upside. If we can break above the $1970 level, that would be a very bullish sign and could open up the possibility of a move towards the $2000 level, possibly even the $2050 level.
You can see that the market has been very noisy as of late, and it does suggest that perhaps the volatility will continue to make things difficult. That being said, I think this is a market that has a lot more going for it than against it, especially as there are so many moving pieces in the global economy right now that people will be paying close attention to. The interest rate markets have been very volatile as of late also so that obviously has a lot to say about what happens with gold.
If we were to break down below the short-term “double bottom” that we had made, that opens up a move down to the $1850 level, an area that previously had been significant resistance. In that scenario, I suspect that there would be a lot of potential value hunting in that area, but we would have to wait for the proper price action to proceed.
I do believe that you should pay attention to the US dollar, but it is not the only driver of where we go next. There are a lot of concerns when it comes to the war in Ukraine, and therefore gold could be thrown around as a result also. The size of the candlestick for the day on Wednesday has been somewhat positive, but what has been truly impressive has been the hammer that had formed during the Tuesday session.