Gold Signal Today 13/05: Bulls Eye $4,880 (Video&Chart)

Potential signal

The gold market has been all over the place on Tuesday as we continue to dance around the 50-day EMA. The 50-day EMA is an indicator that a lot of people will be watching closely as it’s been like a magnet for the gold price for 4 or 5 days now. The $4,600 level underneath remains important, and I think you need to watch that as a potential floor. If we break to the upside, then the $4,900 level will be targeted.

Ultimately, this is a situation where traders are just simply reacting to interest rates around the world and interest rates have been rising. So, we did see gold sell off rather rapidly. Now interestingly enough later in the day, buyers came back in.

Interest Rate Dynamics and Market Sentiment

I think there’s a little bit of a dichotomy here that might be worth watching. The trading public seems to be okay with the idea of higher rates, at least as far as those who trade gold. But I also recognize that it would not take much to spook the market again. While gold is considered to be a safety metal, the reality is interest rates being as high as they are making non-yielding assets less attractive. We saw that with the stock market as well.

Over the longer term, I still believe that gold goes higher, and I think it goes to the $4,900 level, possibly the $5,000 level. A pullback from here could test $4,500. We’ll just have to wait and see. I still like the idea of buying dips. I think keeping an eye on the longer term is probably the route to go. The longer term does suggest higher, but I also recognize that this is a situation where a lot of traders will be very nervous, so you must be cautious with your position sizing.

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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

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