By FXEmpire.com
The gold markets fell during the Tuesday session as we enter a very tight consolidation range. This is more than likely going to be predicated upon the idea of the Federal Reserve meeting coming up in 24 hours, and the fact that we have the ECB meeting on Thursday followed shortly thereafter by the Friday jobs number out of the United States.
Simply put, there are plenty of economic announcements this week traders will need to pay attention to in order to discern which way interest rates may be going. Gold markets of course are a hedge against inflation, and if there is going to be significant easing out of the United States, the gold markets will of course shoot straight up. Gold will get a bid if the Europeans do as well, but it won’t be as much of a profound effect on the market as the Fed would have.
Looking at the charts, $1640 is still an area that we see a significant resistance. If we can get above that level, it’s very likely that we will see much higher prices with $1800 being the ultimate target. Needless to say, there’s a very high chance that the $1700 level would also cause a bit of a reaction as well, and could be a significant target for the bullish trader if we do manage to break out of this consolidation.
Looking at the charts as they stand right now, if there’s any disappointment out of the Federal Reserve there could be short-term trade to the downside as we try to retake the $1560 level. The gold markets do look like they have broken out above the trend line previously, but we still feel that the upper band of this consolidation rectangle will have to be overcome for confidence come back into this market.
Selling this market is going to be tricky, especially if you are looking for anything more than a quick trade. As for becoming bearish all of a sudden, we wouldn’t do it until we clear the $1500 mark. Is there that we see a trend change happening.
Click here to read Gold Technical Analysis.
Originally posted here
