By FXEmpire.com
The gold markets had a wild session on Friday as the US jobs number came out so poorly. The US only added 69 thousand jobs in May, and this has a lot of traders out there wondering about possibility easing by the Fed. The fact is that there is no real statement out of the Fed, but enough gold traders think that quantitative easing is coming that they went long for the session. The fact that the US is the “last bastion” of growth at this point has a lot of traders concerned.
The gold markets shot straight up for the session once the numbers were released, and this saw the market finally break out of the consolidation area that has been containing this market for the last couple of weeks. The $1,600 level finally gave way and this allows the bulls to come into the markets and control it for the short term.
The idea that the Fed could ease is probably a bit of wishful thinking at this point, but there will be easing from several central banks in the near future, and this always drives up the value of gold in general. The demand for a medium to store wealth should be great under most circumstances, but if the Fed or any of its officials suggest that the Fed isn’t thinking of easing – this market could fall apart.
However, the gold market has been in a massive bull trend for over a decade, so all things being equal we like to be long overall. The $1,640 level above should provide resistance, so buying at this point is going to be “chasing the trade.” The market rose roughly $60 on Friday; so to say it is overbought for the short term is a bit of an understatement. The market is obviously bullish at this point now, and we are looking at buying pullbacks as long as we can stay above the $1,600 level. A break below that would be bearish again, so we would be out at that point. However, it looks as if the bulls are ready to pick up the ball and run with it at the moment. Supportive candles and a break of the highs on Friday are both buy signals.
Click here a current Gold Chart.
Originally posted here
