By FXEmpire.com
The gold markets had a positive session on Wednesday as the “risk on” trade came roaring back. This would be predicated on a lot of things, one of the major ones being the fact that Ben Bernanke is testifying in front of Congress today, and any hints of QE3 will send the Dollar much lower, and the asset markets much higher.
The $1,640 level has been one that we have mentioned before though, and the area looks as if it is trying to hold as resistance at this point. The session did see an attempt to get through it, but the action was a bit less than convincing. The candle shows a bit of a pullback at the end of the session, and this suggests that perhaps the market is ready to pullback a bit. The area should offer significant resistance going forward, and unless Bernanke says something to suggest that the Fed is ready to ease again – a lot of weak longs could suddenly cover. The fact that the market hasn’t moved one way or another after the massive shot higher on Friday is interesting, almost as if there haven’t been enough people convinced to buy into the quantitative easing argument for the commodity markets to be taking off. Without a doubt, the next move will be dictated by Mr. Bernanke today.
The next $40 dollars or so is going to be difficult to capture, and as a result we aren’t ready to buy at this level. However, a pullback with supportive action would interest us as long as we can stay above the crucial $1,500 level. The breaking of that level would have us selling this market aggressively as it shows a massive change in momentum and overall attitude in this commodity.
There is no doubt this market is based almost solely on the idea of whether or not the Fed will ease again. The markets are simply is a “risk on, risk off” type of situation now, and the gold futures is without a doubt one of the most telling in this scenario.
Click here a current Gold Chart.
Originally posted here
