On the global front, most of the geopolitical events that have been taking center stage have simmered down over the last two weeks, but the markets have been extremely volatile. The most important event last week was the release of the Federal Reserve meeting minutes, otherwise referred to as the FOMC minutes. In the immediate aftermath of the release, the equity market shot up and the US dollar had its biggest drop in at least a month. All this because the FED signaled worries about a slowdown in the global economy and hinted at lingering concerns on US dollar strength. As the week came to an end, the equity markets had completely reversed that initial movement higher and closed the week on a negative tone, and the currencies that trade against the dollar had also retraced most of their upward movements and were looking quite somber.
Gold Finds Strong Buying Support after Sell Off
Now let’s take a look at the technical developments in the gold market. As I had mentioned in my last report, I expected the gold market to come lower and test its strong support band in the $1,185 region and then garner significant buying interest at that level. This is exactly what transpired in the early hours of October 5th — the gold market tested the $1,185 band and then a strong wave of buying ensued while most of North America was sound asleep. The price of gold snapped back about $50 dollars in a couple days and encountered some tough resistance at the $1,232–35 bands. The market looks like it wants to digest some of these gains and possibly test the next level at $1,250–$1,275. In my opinion, with the seasonal demand for gold coming up, we could see this market try to test higher. It will find strong resistance at the $1,275 level and how it behaves at that pivotal level will be telling on what prices want to do in the near term. Continue reading our market analysis