If we do break above the $1325 level again, that should send this market much higher. I don’t have any interest in trying to catch a falling knife though, so waiting on a break above that level, or perhaps even a bounce from the $1300 level is probably the way to go. If we break down below the $1300 level, then it’s likely that we will find support at the $1275 level next. The market is very technical and tends to go from one large number to the next. It is a fear-based market that we are looking at right now, as the US dollar has been strengthening against almost everything. Ultimately, I suspect that the longer-term traders get to be looking at this as a buying opportunity, and therefore will be taken advantage of what should be value. However, it can be very difficult to deal with a lot of volatility if you are levered, so at this point I would suspect it’s probably best to trade in small increments when you do jump into the market. Let things settle down, and then add to your position.
Gold markets have fallen significantly during the trading session on Tuesday, slicing through the $1325 level. It now looks as if we are trying to reach the $1300 level, which of course is psychologically important. If we were to break down below there, then I think gold markets will unwind quite a bit. However, the US dollar strengthening could be a short-term phenomenon, and therefore it could keep the downward pressure temporary in gold at best.