By FXEmpire.com
The gold markets rose during the session after a strong Friday jobs report. United States added hundred and 65,000 jobs, and this was more than expected. As a result the “risk on” trade became the one everybody thought. However, we are still well within the consolidation area that the gold markets have been stuck in for the last several months. Because of this, we don’t really see that anything has changed even with the strong move on Friday.
We need to see the $1640 level gets cleared in order to start buying this market, as it would show a significant increase in bullish momentum. We can see the same thing about the $1500 level which is below and acting as support. If he gets violated, this would be a massively bearish sign as it would show for our money at least a trend change. However, we also see support at the $1540 level, and would buy supportive action in that area knowing that the massive support level all the way down to $1500 is still intact.
As far as short-term expectations, we think that this market will continue to bounce around in this consolidation area and as such it should be treated like a range bound instrument. Selling of the highs, buying at the lows, and repeating until the formula doesn’t work anymore.
There is a very high chance that this will be the way this market moves for the next 30 days. Eventually, the larger traders will come back from vacation and start move in the markets again. This normally happens sometime in the beginning of September, and as such that is when we are expecting this market to break out of current consolidation areas. With this in mind, it’s very difficult to get overly excited by the gold markets but we feel that over time they should continue to gain value as central banks around the world look to pump money into the system.
With this in mind, we are buying dips with more confidence in selling rallies and will continue to play this range bound strategy for the at least the next two or three weeks.
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Originally posted here
