Gold Forecast: Bounces at 50 Day EMA

• Gold markets continue to see buyers on dips during the trading session on Wednesday as the 50 Day EMA has offered significant short-term support.
• If we can maintain this type of momentum, it’s likely that the gold market will eventually go looking at the highs again.
• The recent high at the $3500 area of course not only makes a nice target, but it is significant resistance and a large, round, psychologically significant figure.

Multitude of Factors

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There are a multitude of factors out there worth paying attention to, not the least of which of course is going to be the Federal Reserve and its monetary policy. If the Federal Reserve starts to cut rates, that should help gold, as it will more likely than not hurt the US dollar. However, I am seeing a lot of concern out there during the trading session on Wednesday as far as risk appetite is concerned, and therefore that gives a little bit of a bid to gold as well. In fact, both the US dollar and gold have done reasonably well during the trading session.

If we were to turn around and break down below the 50 Day EMA, then I think you have to start to focus on what it is people are starting to discount the Federal Reserve doing. Jerome Powell has a speech on Friday coming out of Jackson Hole, and if he is a bit more hawkish than anticipated, it makes a lot of sense that the US dollar could strengthen, and that will in turn work against the value of gold overall. On that breakdown, I’d be looking to the $3300 level as a potential support level, with the $3200 level offering a bit of a floor in the market as well. At this point, as long as we can stay above there, I think we’ve got a situation where traders will continue to look at this through the prism of a market that remains bullish and of course is looking for more volume as we are in the middle of summer, and I do think that eventually buyers push this market above and continue the overall uptrend.

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