The Gold markets rallied a bit during the trading session on Tuesday, after the United States has labeled China a “currency manipulator.” This cause absolute chaos in the markets, and of course this should continue to be yet another reason for gold to rally. That being said, there has been a tremendous amount of volume near the $1475 level, and it’s likely that we could continue to see that offer a bit of support or at least interest for the market.
The trend is obviously to the upside. We have seen a lot of bullish pressure in the gold market, and that should come as no surprise. Ultimately, you can see on the hourly chart that I have attached to this article that we have seen a significant move higher, it of course the Volume Weighted Average Price (VWAP) continues to show that institutional traders are more than likely net long.
December 2019 Gold, 1 hour chart
That being said, I do recognize that the $1490 level offer significant resistance, perhaps extending to the $1500 level. That of course is a large, round, psychologically significant figure, and as a result at the very least you can probably expect a certain amount of profit taking. That being said though, it’s obvious that Gold has broken out to the upside on longer-term charts, and that the $1500 level will only be a stop along the way to higher levels. If we can break above the $1500 level, it’s likely that fresh money would flood into the market, and of course short-term sellers will be running for the hills.
The support on this chart can be found at multiple levels, with the $1470 level underneath being a bit of a short-term “floor” in the market, but I also think that the psychologically important $1450 level could be a nice buying opportunity as well. You can see on the right hand side of the chart that the bulk of volume over the last 30 sessions has been right around the $1470 – $1475 region. All things being equal, I think that is where the buyers are trying to build a staging area for the attack on the $1500 level.
Do not forget that there are other ways to trade gold as well. If you have the ability to trade gold-based and other currencies, you could do so against such currencies as the Euro, British pound, and just about anything other than the US dollar. Ultimately, I do believe the Gold rises against almost all currencies, but the US dollar has gotten a little bit of a safety bid as money flows into the U.S. Treasury markets. It’s not that the gold market will rally against the US dollar, it’s just that you may get more momentum against the British pound especially, as we have the Brexit situation going on. Other candidates may include the Australian dollar, the Chinese yuan, and just about any emerging market currency that you have the ability to deal with.