The gold market continues to see a lot of noise, as we are looking at this market through the prism of interest rates continuing to pressure gold pricing.
Gold
The gold market has been noisy on Monday as we continue to test a major demand area. The demand area is based around the $4,200 level but drops down to the $4,000 level. This is an area that I think remains important, and when you look at the chart, the uptrend line from roughly New Year's Day is currently being tested.
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That being said, the bigger story here is going to be interest rates, especially in the United States, being so elevated. If that remains the case, that does put a little bit of downward pressure on gold, and it is difficult for gold to truly take off in that environment. Whether or not that changes remains to be seen, but we are looking at a market that is at a major point of inflection.
Interest rates continue to be driver
I think this is a scenario that remains one that will be driven by interest rates. Unfortunately, interest rates will remain driven by the overall attitude of the Middle East and the idea that the energy inflation situation will continue to be a main story. That being said, if we can break above the 200-day EMA, that would be a bullish sign, perhaps even to the $4,700 level.
All things being equal, I do like gold longer term, but I also recognize that the bond market is a major problem at the moment, and therefore, we will just have to wait and see. I am bullish longer-term, as we are looking to see whether or not there is going to be a turnaround in the bond markets, as this is a situation where patience could pay off longer-term.
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