- Gold continues to be very volatile, as the month of April was very volatile.
- This makes some sense considering that gold has shot higher over the last few months, so it now needs some time to breathe and perhaps even absorb some momentum.
For this reason, I think the month of May will be very difficult, not in the sense of negativity, but of volatility that could cause problems. Ultimately, whenever we have a significant short-term retracement, there will be many buyers willing to step in and take advantage of the drop in gold prices. Gold is a market that has many different factors working at once, so I think you have to look at the market through the filter of rising or falling risk appetite, as well as many other things.
Looking at the attached XAU/USD chart, this is obviously a bullish chart, so I remain very bullish on gold at this time. This doesn’t mean there will be a significant pullback, but it could be a good way to play on risk appetite. Furthermore, we also need to pay close attention to the interest rate markets because central banks are raising them, and this worries traders a bit. However, if we were to break down, then the $2200 level could be an area where I would become even more aggressive. After all, it would simply mean that gold is much cheaper. As for buying at these high levels, it’s best to be a little more cautious because the gold market is a little overextended.
I suspect that most of this month will likely be consolidation, but I also recognize that we could break out higher or lower, but either way the trend will remain the same. In other words, this is a “long only” market at the moment.
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