Gold Forecast: Markets Breaking Out of Recent Consolidation
As long as there is fear out there, there will be demand for this market.
Gold markets have rallied significantly during the trading session on Thursday to break well above the $1950 level. This is an area that has been important more than once, so therefore it makes quite a bit of sense that we should continue going higher. Beyond that, gold had been in a very strong uptrend, so it does make sense that we resume that drift higher.
We recently had a very vicious pullback, but it should be noted that we had been structurally overbought, so the fact that a parabolic move was sold off so drastically should not be thought of as a big surprise. Quite frankly, the pullback was rather quick, followed by a rather quick consolidation, and then a move to the upside.
The fact that the candlestick is closing towards the top of the range is also a very bullish sign, so keep that in mind. At this point, it looks very likely that the gold market could go looking towards the $2000 level, which of course is a large, round, psychologically significant figure, and an area that will probably cause a bit of resistance as well choppiness. Having said that, we have already sliced through the $2000 level so would not surprise me at all to see it get above there and go looking towards the highs again. There is no reason whatsoever to short gold, and Thursday was without a doubt a confirmation of that fact.
In fact, it is not until we break the 50 Day EMA at the very least that I would consider selling this market, and even then, I would rather see it close below the $1880 level on a daily close. The market will continue to focus on geopolitical risks, inflation, and other such concerns. All of this is very bullish for gold, especially as traders are looking for some type of safety when it comes to finances. The market has been very bullish for a long time, so I think most traders looked at that massive selloff as an opportunity to get involved in what had been a very runaway market. The gold markets continue to be very noisy, but they obviously have quite a bit of bullish pressure. As long as there is fear out there, there will be demand for this market. There are plenty of things to be afraid of.