For example, one of the biggest issues will be the fact that interest rates in America continue to climb quite drastically. If that’s the case, then it’s hard to really get traction in the gold market. I think at this point in time, you need to be looking more or less through the prism of whether or not the $2,600 level can hold. If it does not, and we break down through that uptrend line just below, that could be rather ugly.
On the Breakdown(Click on image to enlarge)Anything below there opens up the possibility of a move down to the $2,500 level. If we do break above the 50-day EMA, which is sitting just above and near the $2,645 level, then it opens up the possibility of a move to the $2,700 level, which is where we had recently formed a double top. The double top, of course, is a fairly strong sign that we are going to struggle, but I also recognize that we have a scenario where liquidity is disappearing, and the market might just go sideways for a while.I wouldn’t put huge positions on regardless because if we do get some type of newsflash across the wire, it could send the market haywire in a situation where there just aren’t that many people involved. I think in the next week or so, gold’s probably more or less neutral. This could be the case for the next couple of weeks, but eventually I expect the bond market in the both to pick up quite a bit of momentum.
