By FXEmpire.com
The gold markets fell during the Wednesday session as the Federal Reserve failed to show any new signs the stimulus. As the gold market is often a hedge against inflation, when the traders out there think that easy money is coming they will buy the yellow metal as a hedge against inflation.
Looking at the gold markets, we simply look like were ready to fall back within the consolidation area that we had been in previously. For the last couple of months, we have seen the market bounce around between the $1540 level and the $1640 level.
The market certainly looks like it’s ready to continue within this range in the near term, and until we get some type of massive easing, there’s very little chance that we will breakout. Because of this, we are now starting to play the gold markets more as a range bound trade than anything else. Granted, we of course are bullish over the long run – but are currently working within a $100 range.
With the European Central Bank meeting later today, it is possible that we will see strong easing measures out of that area, but in order to get the gold markets really moving we will need to see the Federal Reserve get into a monetary easing policy as well. There is some amount of talk that the Jackson Hole meeting in September could be the place where the Federal Reserve starts to talk about adding more liquidity into the markets.
Because of this, we are going to be watching the US jobs numbers on Friday with particular interest. It is possible that a poor John’s number will skyrocket the value of gold as traders will start a look for more free money from the Fed.
Nonetheless, we are assuming until proven otherwise that this range will hold and as such we are buying at the bottom, and selling at the top. This has been very consistently profitable during the summer, and it looks like we probably have a few more weeks of this to come.
Click here for further Gold Forecast.
Originally posted here
