The gold market has been all over the place on Wednesday, as we are getting settled before the Non-Farm Payroll numbers.
Gold
The gold market has been all over the place during trading on Wednesday, breaking below the $4,000 level again before turning around and challenging the $4,100 level. I think this is a market that is just bumping along the $4,000 level and trying to sort out whether or not we can find enough buyers to keep things afloat here.
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The $4,000 level is an area that is going to attract a lot of headlines, so it makes sense that we're hanging out. Furthermore, we have to keep in mind that the Thursday session is non-farm payroll this week instead of Friday, and that will make things a little bit different. With that, I think you have to understand that a lot of short sellers are probably exiting the market after this choppiness, and quite frankly, some people are just trying to play the big figure. Whether or not that holds will remain a mystery in the next couple of days because the Thursday session, of course, will be noisy.
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I think a lot of this comes down to the Thursday close. If we close near $4,200, then we could have a move towards the $4,400 level. If we break down below the $3,900 level, then I think you have a situation where traders could be looking to the $3,500 level. It would not surprise me at all to see that eventually, but I think that is something that is several weeks down the road; we'll just have to wait and see.
Traders are betting on the Federal Reserve raising rates twice between now and the end of the year, and that obviously has an influence as well. Higher interest rates tend to work against gold in general.
This is a noisy market. I think this noisy market continues to be one that favors short-term range-bound traders, but for anything with any type of length to it, I suspect this is all going to come down to the Federal Reserve rate hike expectations, which you can find on the CME FedWatch tool.
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