On a breakout to the upside, I anticipate that the $1880 level will be targeted. This is an area that has been resistance more than once, and therefore I think we could see a bit of difficulty in that general vicinity. Nonetheless, the market could very well end up there quite rapidly as gold does tend to make sudden and erratic moves.
Pay attention to the 10-year yield, because if interest rates in the United States start to rise again, that works against the value of gold. It makes the US dollar more attractive, which works against gold being priced in that same currency. Furthermore, traders would much rather store paper than pay for the storage of massive amounts of gold. Anytime there is yield to be had, gold does fairly poor.certainly seems to be setting up.
However, if we were to break down below the bottom of the hammer, it’s very likely that the market could lose $100 rather quickly. Gold has been extraordinarily volatile, but in the inflationary environment that we find ourselves in, it’s probably only a matter of time before gold has its day. I don’t know if Friday was a major turnaround, but it certainly looks as if it could be the beginning of something.