By FXEmpire.com
The gold market fell off of a cliff on Wednesday as the “risk off” trade continues. The rush to the US Dollar is certainly the culprit, as the Spanish had a poor debt auction during the session as well. The Europeans suggested during their press conference that the economy in that region is going to be poor, and as a result traders ran into the safety of the US Dollar. As the gold markets are priced in Dollars – it fell.
The market looks to test the $1,600 level, and this was one of the areas that we were so interested in. The market fell hard for the session, and closed near the bottom. However, we find the gold markets nowhere near a major area, so buy or sell signals aren’t available at this point. The $1,600 level looks as if it should be a relatively interesting support area, based upon the “large round number”. Below that, we have to look to the $1,500 level as support as well. If that area gives way, gold could keep falling.
The upside will be the toughest trade at the moment, and as a result we like the idea of letting the market stabilize before buying. We aren’t ready to sell yet, but it has to be said that the market is starting to look weak. While the recent action is very bearish, looking at the longer-term charts we can’t help but notice that the market was at roughly $250 just ten years ago. Because of this, we are typically either going to be long, or flat of this market. We haven’t sold gold for a long time.
The Friday Non-Farm Payroll report will move the market, but we suggest that the action may be a bit thin on that day as it is Good Friday, and the announcement isn’t until the Americans come on board. With that being said, we are looking for stability, and perhaps the reaction of gold markets to the NFP numbers in order to possibly buy. That buy order will more than likely not be fired off until Monday.
Gold Forecast April 5, 2012, Technical Analysis
Originally posted here
