By FXEmpire.com
The gold markets bounced after initially falling during the session on Thursday, to remain within the consolidation area that we have become so accustomed to over this past summer. The market really doesn’t seem to have any will or desire to break out of this area, so we suggest that this is more than likely going to be the latest in a series of bounces back to the $1620 level. Because of this, we are more than willing to buy gold on a break of the highs from the Thursday session, as we think it does clear the markets for about a $50 an ounce gain.
Looking forward, we think that this consolidation area between $1640 and $1540 will remain throughout the rest of the summer, barring some type of meltdown in Europe. With this being said we think that this is an excellent short-term traders market and should continue to be until the first or second week of September.
Naturally the news flow is always going to be a fluid thing, but at this point in time we really see no reason for this market to go up or down for any sustained move. Range trading is the way to go, with buying done it down where we are now, and selling done right around the $1620 level.
The US dollar has been gaining overall, but it seems difficult for the dollar to break above the current areas on the US dollar Index, and as a result it will be difficult for gold to rise based upon a strengthening of the US dollar. In a roundabout way, it’s easy to say that that trade is over, and now we need to see either a new round of panic or a new catalyst for a “risk on” environment.
As the summer is very illiquid time of the year, we believe that it won’t be until the larger firms come back from summer vacation that we will see a serious move. Junior traders simply are not the ones to typically move the markets, and as such they will be waiting for the more experienced crews to come back and push this market in one direction or the other.
Click here a current Gold Chart.
Originally posted here
