- The gold market has shown itself to be somewhat bullish in the early hours here on Wednesday, as we continue to hang around the crucial $3,400 level.
- Keep in mind that gold will suffer from a little bit of a lack of volume like we see in other markets.
- So given enough time, I think that could be an issue, but the $3,500 level above, believe, is calling in.
I do think that we’ve got a situation where traders will pay close attention to it and whether or not we can break above there. If we can break above the $3,500 level, then you have a scenario where we very well could break out to the upside and go much higher, perhaps $3,800 based on the measured move. We are getting close to the end of summer, maybe in another week or two, and you may see more traders out there willing to get involved and start buying things.
But I also recognize that there are a lot of questions asked about gold overall and the fact that the Federal Reserve is going to continue to be front center. People do believe that they are going to cut sooner or later. And if they do, that should help gold because it will sink the US dollar.
There are Reasons for Gold to Move Soon
That being said, though, I think you’ve got a situation where traders are going to be looking at the geopolitical situation as well. And of course, the longer term trend, which has been so bullish, looks like a market that’s just simply consolidating to work off some of that huge run higher. But it does not take a lot of imagination to perhaps shift the idea from a rectangle to an ascending triangle.
I mean, you could have that argument now, so we’ll just have to wait and see. But as things stand right now, it looks like gold still favors the upside from the longer-term standpoint.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
