Gold continues to show signs of strength on Monday with the US dollar falling, and the overall outlook for central bank rate cuts, especially in the USA.
Gold
Gold continues to show signs of strength on Monday and in fact looks a lot like a market that wants to break out. With that being the case, I think you have to look at short-term pullbacks as potential buying opportunities with support perhaps all the way down to the $4,800 level, maybe even as low as the 50-day EMA at $4,617.
This is a market that I think has been rather bullish for a whole multitude of reasons, not the least of which would be the fact that central banks around the world continue to hoard gold. We also have questions asked about central bank policy, in other words, central banks around the world cutting rates, most specifically and probably most importantly the Federal Reserve.
Central Bank Policy and Federal Reserve Influence
If that does in fact end up being the case, then it makes quite a bit of sense that gold will continue to go higher. It's also worth noting that the US dollar has been softer during the session and therefore I think one would have to assume that helps also.
We could grind all the way to the $5,600 level before it's all said and done, but we'll just have to wait and see whether or not that actually ends up being what we do next. I wouldn't count on an easy move higher, but I do think that the buyers are still very aggressive here.
Shorting gold is all but impossible as we have seen so much rebound after what had been a horrific day a couple of Fridays ago. I remain bullish but I also recognize that you probably need to find little bits and pieces of value on short-term pullbacks.
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