Gold markets show a lot of resilience on Tuesday, as we continue to defend the $4,000 region in this market.
Gold
Gold markets have initially fell during the trading session on Tuesday, but we continue to see support below the crucial $4,000 level.
The $4,000 level is obviously a large, round, psychologically significant figure and one that traders are clearly paying a lot of attention to. I suspect there's probably a lot of options trades there as well, and it's an area that's been important in the past.
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Because of the bounce that we've seen during the day on Tuesday, unless we get some type of massive announcement out there or a surprise type of news, I anticipate that gold will, in fact, continue to try to hold the $4,000 level. Longer term, I'm not as sure, but in the meantime, it looks like we are willing to fight back anytime we get below there. Clearly, there's a lot of demand, judging by the reaction.
Market Outlook and Technical Levels
The $4,200 level above will be difficult to overcome, and between here and there, we have to fight the $4,100 level, so it's going to be a bit of a fight for everybody involved that remains bullish.
I don't necessarily think gold is going to turn the corner quite yet. I'm looking for more consolidation over the next several days, if not weeks, as we try to determine what to do with this big figure.
If we were to break down below the $3,900 level, I think that opens up the $3,500 level for a target. In the meantime, I think your upside is probably capped at the 200-day EMA just below $4,400, and I think even that is a little bit optimistic.
Expect a lot of back-and-forth trading over the next couple of days, especially considering that Friday is Independence Day in the United States, meaning that the futures markets will have special hours and low liquidity.
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