Gold markets have spent most of September falling, and as we close out the month, we find ourselves testing a major area of confluence.
The $4,150 level begins a significant demand zone that extends down to the $4,000 level, and we are also testing a trend line that goes back at least to New Year’s Day, if not back to the middle of summer last year.
With all of that being said, we are definitely in an area where gold has to make a bigger decision. A breakdown from here could have the market testing the $4,000 level, and quite frankly, if we break below the $4,000 level, that would be extraordinarily bearish.
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Interest rates will continue to be a massive mover of gold in general
Interest rates climbing continues to be one of the major detriments to the gold market. As you get paid to hold paper, non-yielding assets such as gold or silver typically will not perform well. With that being said, this is essentially going to be an asset that is a story of what rates are doing.
The market is now continuing to see a lot of things come together in the Middle East, as well as the U.S. economy, and this will have a major influence on what we do next. The Middle East has been the main driver due to the idea of energy inflation. That obviously is an important factor for most traders, and if energy inflation can cool off, then that will allow rates to drop and therefore should be beneficial to gold.
This is a month that is literally going to hang on the words of each headline. That being said, unfortunately, it seems like every time we get some good news, there will be bad news to turn around and squash it. I just do not know that changes this month, although obvious headlines such as a lasting peace or an acceleration of the war will give you an obvious direction with interest rates.
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