- Gold traders have been very bullish during the trading session on Monday again, as we continue to see a lot of strength in this market.
- With central banks around the world accumulating more gold, this makes a lot of sense as traders will continue to follow the deeper pockets of central banks that can essentially buy unlimited amounts if they choose.
Furthermore, you need to keep in mind that the gold market is also reacting to the idea that the Federal Reserve is likely to cut interest rates, not only in the month of September, but possibly a couple of times after that. Furthermore, there are a lot of geopolitical issues out there that continue to drive the gold market higher, and then you can just look at the momentum over the last couple of years, and ask yourself the question “why would I want to short this market anyway?”
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Technical Analysis
The gold market continues to see a lot of buying pressure, and the candlesticks from both Friday and Monday look very strong, especially with the large amount of volume that came into the market at the beginning of the previous week. We have just broken out above a major ascending triangle, and the “measured move” of that ascending triangle suggest that gold could reach the $3800 level. At this point, there’s nothing on the chart that suggests that it won’t happen. That doesn’t mean that it happens overnight, nor does it mean that it’s easy, but it certainly makes a lot of sense considering that gold has been strong until this summer, where it simply consolidated and then broke out to the upside yet again. It’s difficult to change these trends, and at this point in time I don’t see this trend changing easily.
Even if we do pull back, I anticipate that there should be plenty of support near the $3550 level, possibly even as high as the $3600 level, depending on the momentum of the pullback and of course, the reason for it.
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