• The gold market has chopped back and forth during the trading session here on Thursday as we are hovering just above the crucial $4,000 level.

• The $4,000 level is an area that I think traders continue to look at very closely, mainly due to the idea that a large, round, psychologically significant figure probably attracts a lot of attention from options traders.

  

That being said, it’s interesting that the XAU/USD pair continues to look kind of sluggish despite the fact that interest rates are starting to drop. So that is a little bit of a move from the negative correlation between interest rates and gold that we saw. Regardless, the $4,000 level for me is crucial. If we give that up, we will probably drop another $500.

I’m not a big fan of shorting gold, although it clearly doesn’t do well buying it over the last couple of weeks. But if we do bounce from here, I can see a short-term opportunity might present itself for both buyers and sellers. I would anticipate that the 200-day EMA offers a bit of a barrier.

Ultimately, this is a market that I would fade signs of exhaustion until we see some type of change in attitude, and it’s probably worth noting that the US dollar is extraordinarily strong despite the fact that we have the overall attitude of the markets changing, and I think you have a market that I think remains noisy.

Long-Term Trend and Trading Strategy

Longer term, I do like gold, but I think if we do pull back from here, and when you look at the longer-term charts, it does make a certain amount of sense, we could drop down to the $3,500 level, and it would just be a nice pullback in a huge uptrend.

So, with that being said, I like the idea of buying gold eventually, just not right now. If you’re a day trader, you might be able to trade the pop, but you have to be very nimble and get out at the first sign of trouble.

Ready to trade today’s Gold prediction? Here’s a list of some of the best XAU/USD brokers to check out.

Christopher Lewis is a technical analyst and market commentator at DailyForex with more than two decades of trading experience in Forex and other leveraged markets. Based in Columbus, Ohio, he specializes in chart-based analysis of major currency pairs, stock indices, commodities, and energy markets, focusing on clear support and resistance levels, trend structure, and risk management. Christopher produces daily written and video analysis for traders who rely on technical setups to navigate volatile market conditions

As seen on: Pairs Of Aces Podcast,The Trader Guy, FXEmpire