- Gold shows intraday resilience above $4,000 but remains stuck in a noisy, low-volume environment.
- Holiday trading conditions and geopolitical factors shape the backdrop, with major levels defining whether the broader uptrend holds or a topping pattern emerges.
The gold market initially fell during the trading session here on Monday, only to turn around and show signs of buying pressure. That being said, the market continues to see a lot of back and forth noise, and the market hanging out above the $4,000 level, of course, does suggest that at least the market is trying to try and get used to the idea of $4,000 gold. And if it can, and the longer that it does, the better this is for the longer-term uptrend. It is worth noting that volume has dropped off, and this is a holiday week in the United States, which will obviously have a major influence on futures markets. So, I don't look for a big move here.
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Now, obviously, extraneous circumstances can definitely come into play in the gold market, especially with Ukraine and geopolitics, et cetera. And that will have a major influence on gold, but so will central bank behavior as they are buying gold. But also, we have to pay close attention to the trade war type of situation.
All things being equal, this is a market that does see a certain amount of stability here. And as the holiday volume really starts to drop, it'll be interesting to see how this plays out in the month of December. If we break down below the $3,950 level, we will have broken a swing low and the 50-day EMA. And I think at that point, you really start to look at pretty negative momentum. That would be the classic topping pattern that you see on Wall Street time and time again: a big, massive run higher, a pullback, a lower high, and then a lower low. I'm not calling for that yet, but I am saying the dropping volume does that make that a viable possibility.
If we can clear the $4,200 level to the upside, then I think the uptrend continues, and we go looking to the $4,400 level. Honestly, the best thing for gold at this point is to go sideways, so if you're a short-term back-and-forth range-bound trader, this might be your market.
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