When you look at a weekly chart of gold, it’s up 1.3% now—$42 for the week. That’s not bad. Remember, I told you the market’s in a consolidation phase. It’s trying to figure out what to do.
If the market breaks out to the upside, well then, the $3500 level becomes another important area, possibly for a retest. What I see in the market right now is divergence; momentum is pointing down. The market has upside bias because it’s over the 18-day average, but when you lose this bullish momentum, often prices try to get closer than they have to the 18-day average than what we’re seeing.
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