By FXEmpire.com

Gold markets continue to do very little during the Wednesday session as traders await the outcome of the European Union summit over the next couple of sessions. In the meantime, we expect very little out of this market as many will consider it too risky to be involved with before hearing the results of this meeting. Market expectations are low, and as a result it is very possible that the Europeans could surprise and force an initial knee-jerk reaction in this market.

However, we feel that we are still in the consolidation range between $1640 and $1540. There are several different scenarios that could come into play in this gold market. If the Europeans start easing rapidly, the dollar should appreciate in gold should fall. However, there’s also the possibility that gold then becomes a safety play if the summit produces nothing.

The expectations of course are going to be low, as the European Union has had 19 such summits after the financial crisis. The reality is that the markets had been buying risk assets trying to get in front of the summits, and every time has been disappointed. In the end, the rallies are simple selling opportunities once it’s all said and done. It is because of this, that we think the markets are being so cautious at the moment. Looking ahead, we think that the Friday close will tell the story as far as sentiment is concerned. It is because of this that we are not trading gold markets until the Friday close, and in fact will only base our trade off of how the week finishes.

Looking forward, we feel that eventually the gold market will get another bid in it. Ultimately, many of the world central banks will be easing in the near future this should make gold a much more attractive aspect going forward, especially for traders in places like Europe. The last 10 years have in fact been a very bullish for gold, and there really isn’t much out there to suggest that this is about to change. Of course, if we do manage a daily close below the $1500 mark, we are willing to change her mind and sell gold at that point.

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Originally posted here