By FXEmpire.com
The gold markets fell during the Thursday session as the “risk off” trade came back into play. With the European Union summit going on for the next 48 hours, it is very likely that traders will not want to take on too much risk at this moment in time. This should stifle any growth in the gold markets for at least a couple of days.
However we do see the $1540 level as strong support going all the way down to $1500. Is because of this that we strongly advise not selling this market, and will in fact be looking for some type of supportive candle in this $40 range. Looking forward, we need to see a breakout above the $1640 level in order to hold onto any longer-term buy positions. In the meantime, we suspect that most of the action will be fairly choppy as the world concerns itself with things going on in Europe.
The gold market will get a little bit of the safety bid, but mainly in other currencies. In this particular pair, and remember that it is a pair – the US dollar is simply far too strong to see any significant strength in this market. However, if you have the ability to buy gold and other currencies, such as the Euro or the Yen, there may be value to be found in those markets.
As long as the world waits in anticipation for a result out of this summit, it’s hard to believe that there will be a sudden “risk on” rally. Recently, the markets have been a very binary matter: you either see the ability to take on risk, or you don’t. As things are trading in tandem, one of the first clues that you will see for the gold markets to rise will probably be found in the oil markets. Lately that market has been a much better barometer of risk appetite. With this being said, down to the $1500 level we are comfortable looking for supportive candles to buy. If for some reason we close sub $1500, we would become aggressively short of the gold markets as this would show a major breach of support.
Click here to read Gold Technical Analysis.
Originally posted here
