A breakdown below the 50% Fibonacci level would be a negative sign and could lead to a drop to the $1755 level, where the 61.8% Fibonacci level sits and may offer potential support. However, if the market were to drop below this level, it could send the market even lower, potentially returning to the lows that were reached before the rally began.
It's important to note that the US dollar has a negative correlation to gold, and rising interest rates also pose a concern for the market. There have already been three major selloff candlesticks since the market reached its high price. This volatility is reflected in the market's position between the 200-Day EMA and the 50-Day EMA indicators., traders should approach the market with caution and focus on shorter time frames.
Overall, while the gold market has found some support at the 200-Day EMA, there is a risk that it may break down below this level, potentially leading to further declines. The market is also facing headwinds from the US dollar and the prospect of rising interest rates. Traders should exercise caution and focus on shorter time frames while keeping position size reasonable.
It may be wise to avoid large trades until the market shows signs of breaking out of its current range. Once it does, then we should have a bit of confidence build up, and a bit of “FOMO” back into the market. With all the noise coming out of the bond market and of course the US dollar, gold will continue to get pushed around on a daily basis, so you should look at this as a very choppy and short-term range-bound market for the time being.