By FXEmpire.com
Gold markets fell during the session on Tuesday as the markets were a bit concerned by reports of the Italian prime minister suggesting that he could not rule out Italy needing to dip into some European bailout funds. This is the first time that any suggestion of Italy needing a hand has been made, and although it was in somewhat of an offhanded manner this does suggest that the situation in Europe is getting more and more tenuous.
While the gold markets sold off, it should be suggested that perhaps trading gold in terms of Euros is the way to go as the Dollar will certainly get a bid in this type of environment. We still see this market is being consolidative between the $1640 level on the top, and the $1540 level on the bottom. It is with this set of boundaries in mind that we look at the markets presently.
On a supportive candle near the $1540 level, we are more than willing to buy especially considering the fact that the market has been in an uptrend for the most part over the last 11 years. However, if you have the ability to trade this commodity in terms of Euros or even Yen, we suggest that you do it in those denominations. If this market rises, it should absolutely explode against the Euro as that is the center of most things concerning in the markets right now.
If the market races back up to the $1640 level, we would consider taking a long position if we can close above it on the daily chart. As for selling, although it could feasibly be done, we still aren’t as convinced to the downside in this market. One of the biggest reasons of course is the fact that the lows are starting to grind a little bit higher, and of course the above-mentioned 11 year uptrend. With all this in mind, we do prefer to buy gold all things considered, but with the economic situation in Europe we may get a lot of nasty surprises between now and the end of the year.
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Originally posted here
