Gold markets have rallied again during the trading session on Friday, as we have broken above the 50 day EMA. This of course is a very bullish sign, and it suggests that we are going to continue to see a move towards the upside. There has been a significant amount of support underneath, and now that we have broken above the gap that had formed earlier in the week, that is a very bullish sign. There is a lot of supply at the $1960 level, so pay close attention to that area. I think short-term pullbacks will continue to offer buying opportunities, and especially if we do get stimulus coming out of Washington DC as it will work against the value of the US dollar.
To the downside, the $1850 level is massive support, followed by the $1800 level. I was hoping to see this market pull back towards the $1800 level, but we did not get that opportunity. Nonetheless, it is likely that the markets will continue to push higher anyway, so at this point you have to be looking for short-term pullbacks as buying opportunities. It is almost impossible to short this market unless of course we get a sudden run towards the US dollar, perhaps due to a failure of Congress to push through fiscal stimulus. In other words, we unfortunately have a lot of political risk out there, which is akin to letting a bunch of toddlers run the financial markets. Nonetheless, we have been in a longer uptrend, so this is why I was not a seller on the way down.