- Gold’s recent rally is losing momentum as gains stall after the all-time high near $4,400, with declining volume signaling caution.
- Despite volatility and upcoming Federal Reserve uncertainty, the broader trend remains bullish unless the price breaks below $3,950.
Gold initially rallied during the trading session here on Monday, but it looks like it's struggling to keep those gains. That does make a little bit of sense because, quite frankly, the markets cannot go straight up in the air forever, despite what you'll hear on social media. This isn't to say that gold is suddenly something you should be shorting. I'm just saying that we need a little bit of reality to come back into the markets.
Since making the recent all-time high right around the $4,400 level, the volume has been dropping. Volume is a little bit less than normal, although nothing to worry about, but that typically is not a good sign. Although again, I don't think this is a market you should be shorting. I like buying short-term pullbacks, but I think that ends up being a short-term trade. Right now, there's just far too much in the way of uncertainty to have clean moves, and we have a Federal Reserve interest rate decision next Wednesday that will have a major influence on this market. In between now and then, it's just going to be conjecture and a lot of rumor mongering online as per usual.
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This is obviously a bullish market as things stand right now, and it's still not until we break down below the $3,950 level that I change my attitude. Silver has been explosive as well, but this is probably where I'm trading more comfortably. Full disclosure, I hate trading silver because it's so thin it can have these wild moves. And those of us who have traded silver for a while recognize that it can cause a lot of damage.
Gold, on the other hand, is a much thicker market. There are a lot more participants in it, and therefore it tends to make temperate moves. I think that's what you're seeing now is a gradual grind higher, but one that should continue to attract inflows. I don't short this, at least not until we get below $3,950, somewhere we are nowhere near right now. But if we do break down below there, not only am I going to short the gold market, but I’m also probably going to be short pretty big. In general, though, I like buying dips. I think we do just gradually drift higher.
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