The Tuesday session is probably going to be less important than the Wednesday session, so for the next 24 hours I will probably remain somewhat ambivalent of this market.
Gold markets went back and forth on Monday as we continue to see a lot of volatility in general. That being said, the $1830 level continues to be very important. That is an area that had previously been resistance, so it does make sense that we would see the previous resistance level offer support. That being said, the market is likely to see more volatility going forward as we await the FOMC statement and press conference on Wednesday. This will certainly give us a bit of a “heads up” as to where we are going next, as markets are moving solely upon the idea of risk on or risk off.
The market has been bullish over the last several trading sessions, so it is not a huge surprise to see that we recovered a bit after the initial plunge. That being said, the $1850 level above is a potential target, and if we can break above there then it is likely that the market will go looking towards the $1875 level, an area where we have seen a lot of noisy behavior. This is an area that has been very choppy in the previous trading, so it would not be a huge surprise to see noisy behavior there.
If we break down below the $1830 level, then it is likely that we will go looking towards the 50 day EMA, which sits near the $1808 level. The 50 day EMA is curling higher, and it does suggest that we are going to continue to see dynamic support underneath. We need to get an idea as to how hawkish the Federal Reserve is going to be, as it will greatly influence what happens not only with gold itself, but the US dollar. Ultimately, this is a market that I think will see plenty of noisy behavior and it is worth paying close attention to the way we react on Wednesday to that statement. The Tuesday session is probably going to be less important than the Wednesday session, so for the next 24 hours I will probably remain somewhat ambivalent of this market. That being said, we have some levels worth watching and you need to pay close attention to them.
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