- The gold market has initially fell during the trading session on Wednesday, only to see buyers jump back to near the $2900 level, a large, round, psychologically significant figure.
- It’s also worth noting that we have seen a little bit of an uptick in volume, so that is something that certainly looks bullish as well.
Technical Analysis: Bullish Flag?
At this point in time, you could make an argument that we are in the midst of forming a bullish flag, which obviously will capture a lot of attention from traders. Ultimately, this is a market that if we do in fact break this bullish flag, people will be looking for a “measured move” of approximately $350. That could open up a move to the $3300 level over the longer term. This isn’t to say that it would be easy to get there, but that is what the technical analysis suggests at the moment.
The 50 Day EMA is at the bottom of the bullish flag, and I think this is probably worth paying close attention to. With this being said, I have more of a “buy on the dips” bias here, but we are getting fairly close to a potential break higher. Keep in mind that the US dollar continues to fall, and that helps gold, but we also have interest rates plunging in America as well, so it makes gold much more attractive.
Beyond all of that, we also have a potential tariff war that is burrowing, but that seems to be a situation that is somewhat in flux. Ultimately, as the US dollar continues to get hammered, you should see traders running to gold for safety. Geopolitics should not be ignored here either, because we still have to question what’s going on with the Ukrainian war. Ultimately, this is a market that’s been bullish for some time, and it doesn’t look like it’s ready to give up that attitude quite yet.
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