• Gold rallied nicely during the Friday session from the crucial $2,300 level.
• This is an area that has been important multiple times in the past, so it does make a certain amount of sense that traders will jump in and try to take advantage of any attempt to test that support level.
• This is an area that I do believe continues to be a major “line in the sand” when it comes to the bulls.

At this juncture, I do think that it is probably only a matter of time before we break out to the outside and go challenge the top of the overall consolidation, which is near the $2,400 level. Keep in mind, silver has been bullish for a long time and this recent action over the last couple of months has basically been an exercise in digesting a lot of the momentum that has jumped into this market. After all, the market shot straight up in the air before, but now it looks like we have work off a lot of that excess.

A Lot of Potential Reasons to Go Higher

Keep in mind that there are a lot of things out there that could continue to favor higher pricing in gold, not the least of which will be the United States government borrowing one trillion dollars every 90 days. Furthermore, we also have geopolitical concerns and of course war everywhere. Central banks around the world are net buyers of gold, so that also is something that you need to be cognizant of, and it should continue to lend a little bit of support for this market.

That being said, if we were to break down below the $2,280 level, then we could see a breakdown towards the $2,100 level, maybe even $2,150 where the 200 day EMA currently sits. All things being equal, this is a market that I continue to buy dips in. I just don’t have any interest in shorting gold. If we do break down, I’ll just be looking to buy at lower levels.

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