In my daily market overview, the gold market commands immediate attention, especially considering the introduction of US tariffs on Canada and Mexico.
Initial Panic and Liquidity Crunch:
The implementation of these 25% tariffs, coupled with the existing 10% tariffs on Chinese goods, initially created substantial market chaos. During the early trading session, gold prices briefly appeared poised for a complete collapse. However, it is crucial to recognize that the primary driver behind this selling pressure was a rush for liquidity. Many traders needed funds to cover substantial losses arising from widespread sell-offs in other asset classes.
Dollar Strength Exerts Downward Pressure:
It’s also important to acknowledge that the strengthening US dollar had a predictable and negative impact on gold, particularly after its recent and rapid ascent.
Navigating the Noise: A Long-Term Bullish Stance
Despite the anticipated short-term volatility, I maintain a longer-term bullish perspective on gold. I believe that the market will continue to exhibit considerable “noise,” but fundamentally, the factors supporting higher gold prices remain intact.
Strategic Patience is Paramount:
Patience will be a critical virtue for traders in this market. While the overall trend remains strongly upward, I don’t anticipate a sudden, parabolic surge. Instead, expect a measured, grinding upward trajectory.
Key Levels to Watch:
Traders should closely monitor the $2800 level. This represents a significant psychological barrier, and the recent breach to new highs has generated considerable excitement. While further new highs are expected, it is only a matter of time before the market sets its sights on the $3000 level and beyond.
Trading Strategy:
I have no inclination to initiate short positions in gold. Instead, I firmly believe that the prevailing strategy should be to “buy on the dips,” capitalizing on temporary price declines to accumulate positions in anticipation of continued upward momentum.
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