Gold Continues to See Volatile Moves 

• Gold continues to suffer at the hands of external pressures. 

• Gold remains very sensitive to interest rates in the United States. 

• Markets in general remain very leery of tension in the Middle East. 

• Gold is still very much in an uptrend, despite the recent pullback. 

Gold markets have been all over the place during the last few days, as we have seen quite a bit of volatility. It is an abrupt change from what we have seen for so long. Gold had recently reached all-time highs in the spot market, trading near the $2400 level. However, we have seen a lot of noisy behaviour over the last couple of weeks, culminating with a massive selloff during the Monday session that had the market reach toward the 20-Day EMA. 

External Pressures 

There are a lot of external pressures on the gold market, both positive and negative. Recently, there had been a rush into the gold market in order to protect wealth from geopolitical events, and of course, the fact that at one point, the Federal Reserve was expected to cut rates as many as seven times in 2024. However, over the last several months we have seen the Federal Funds Futures markets go from pricing in those seven interest rate cuts to now only suggesting that there will be one or two this year. 

The recent action has been very noisy, but at this point, it’s obvious that we have a lot of erratic behaviour that will more likely than not continue to be a major issue. Furthermore, traders will be paying close attention to the Middle East, and whether or not there is any escalation in the conflict between Israel and Iran. If those tensions flare up again, we could see gold rally quite significantly as it did previously. 

Technical Analysis 

The gold market does look bullish in general, but the last couple of candlesticks have suggested that perhaps we are still in the midst of trying to form a bit of a basing pattern. After the massive negative candlestick from the Monday session, it is worth noting that the Tuesday candlestick ended up forming a hammer right at the crucial 20-day EMA. The market then broke above that candlestick, typically an area that a lot of people will use as a sign to start buying. However, later in the day as the yield shot higher in the United States, the gold market fell, forming an inverted hammer. In other words, it looks very likely that the market will continue to see a lot of choppiness until traders can decide on the overall directionality. That being said, the market is still very much in an uptrend. 

Ultimately, there are a lot of areas of support underneath that could come into play, including the 50-Day EMA, the $2200 level, and then after that the $2150 level. These are all areas where we have seen action in the past that could bring in a bit of “market memory.” On the upside, the $2400 level will continue to be crucial, and breaking above there could kick off another leg higher. However, it does make quite a bit of sense that consolidation could be in the near term, as the market had been so aggressive in its move higher. 

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