Gold Forecast: Gold Find Buyers on the Short-Term Dip

The gold markets have pulled back during the trading session on Thursday to reach the $1923 level. At that point, the buyers came back into the picture and started to push this market to the upside. The $1950 level attracts a certain amount of attention; therefore, I think breaking above there solidly will allow this market to go towards the $1970 level, an area that has seen plenty of resistance.

The candlestick does suggest that perhaps we will continue to push higher, but short-term pullbacks may cause the occasional noisy bit of trading. However, the jobs number coming out on Friday will have a major influence on what happens next, so you should pay attention to how the markets close on Friday. That could give us an idea as to where we are going long term, and therefore it will be interesting to see how this all plays out.

The $1900 level underneath has been very supportive recently, and now it looks as if we had formed a small “double bottom” in that general vicinity. If we break down below there, it could be very catastrophic for gold, perhaps sending gold down to the $1850 level.

On the upside, if we were to break above the $1970 level, then it is likely that we go looking towards the $2000 level next, maybe even the $2050 level, an area that has been visited recently. Gold is continuing to move in negative proportion to the bond markets and yields as per usual. Furthermore, with the jobs number coming out on Friday it will have a major influence on what happens with the US dollar, which by extension will have a lot to do with what happens in the gold market.

As things stand right now, we are simply in a consolidation area between $1900 and $1970. We are getting closer to the top than the bottom, so one would expect the occasional short-term pullback but do not necessarily think this is going to be the beginning of something big one way or the other. However, it is worth noting that the jobs number can cause major volatility, and therefore I will be looking for short-term “buy on the dip” type of opportunities after the announcement is released and digested. That being said, if we were to break down below the $1900 level on a daily close, I will switch to bearish.