- The gold market rallied again during the day on Thursday as we continue to see a lot of concerns and questions about the overall global economy.
- All things being equal, the gold market looks like it will continue to go higher over the longer term, but I also recognize that it might be a little stretched.
- It is because of this that although I like gold for a longer-term move, I also recognize that we may have some work to do in this neighborhood.
Range Forming?
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I think there might be a range forming here, with the $3200 level being support, while the $3500 level is resistance. This $300 range does make quite a bit of sense, because gold has gotten far too ahead of itself recently, and I do think you need to keep an eye on the fact that we are a bit stretched here. With that being said, I think you do have a situation where gold eventually takes off to the upside, but you also have to be aware of the fact that we may get the occasional pullback.
That being said, I think these pullbacks end up being buying opportunities, because quite frankly it’s very difficult to short a market that has been so strong for so long. That doesn’t mean that we can’t fall from here, it just means that the preponderance of the evidence suggests that we are going to have an easier time rallying as opposed to falling apart. If we did break down below the $3200 level, then you can make an argument for a deeper correction, but it’s really not until we break down below the $3000 level that I would be concerned about the trend at all. Any pullback at this point in time should be thought of as a buying opportunity once you see the market start to bounce again. I have no interest in shorting gold anytime soon.
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