Gold markets have continued to find selling pressure on rallies, and of course Tuesday was no different. The $1215 level is the beginning of the selling pressure during early New York trading, as the market gave back much of the gains from earlier in the day. I believe that the market is trying to tell us that it wants to test the $1200 level underneath, so I suspect that rallies will continue to be sold. Longer-term though, I think $1200 could tell the entire story.
This being the case, I do like the idea of buying dips but I also like the idea of buying dips a little bit closer to 1200. As a shorter-term trader, I would be looking towards selling rallies that show signs of exhaustion, has there should be plenty of them. I believe that the next couple of weeks could be more compression, as we are heading into the quietest month of the year, as many of the world’s largest traders away at vacation. It’s very likely that we will see a lot of volatility, but in the end I suspect that the market is still focusing on $1200 more than anything else.
Trade war talks have been surprisingly negative for the gold market, but this is probably a function of treasuries being bought more than anything else. Ultimately, we could get some good news, and that could turn things around. If we break down significantly below the $1200 level, that would be extraordinarily bearish for gold, perhaps opening up the door to $1140 next.