Gold markets fluctuated during the trading session on Tuesday as markets are awaiting the Federal Reserve policy and statement decision on Wednesday. Because of this, the market is likely to continue to see a lot of noisy behavior, as we are essentially stuck in the overall range.
Speaking of the range, the $1790 level underneath is massive support, with the $1830 level acting as resistance. It is also worth noting that the 50-day and the 200-day EMA are both essentially flat, which shows that the market has nowhere to be. Once we get that announcement out of the way, it is likely that we can find a little bit of direction. At this point, the market is going to continue to look for directions coming out of the US dollar, and the idea of interest rates. With that being said, hopefully we will get a little bit of clarity going forward and start to play the market instead of watching it drift.
Working below the $1790 level allows the possibility of a move down towards the $1680 level where we had previously seen the double bottom form. On the other hand, if we do break out to the upside, we not only could reach the top of that gap, but possibly even start a whole new uptrend. I think at this point it is obvious that the market has been waiting for some type of catalyst, but we should also keep in mind that we are in the dead of summer, so that does not help the situation.
Furthermore, the debate between inflation and deflation continues to be a huge factor as well, so I think at the end of the day we will eventually get a significant and impulsive candlestick that we can follow, but until then it is going to be to be choppy and short-term ahead. I believe at this point gold markets could also pay close attention to silver, which has shown quite a bit of weakness during the session on Tuesday, so that could drag gold down right along with it if the correlation comes back into play. This is a simple matter of waiting to let the market tell you where it is going.
