(MENAFN- Daily Forex)

• Gold is hovering near the key $4,000 level with sideways action suggesting temporary stability.
• While momentum has cooled, holding above $3,900 could sustain bullish sentiment, though a drop below may trigger a deeper correction.

Gold has rallied slightly during the early hours here on Friday as we are hanging around the $4,000 level. The $4,000 level, of course, is a large, round, psychologically significant figure that a lot of people will be paying close attention to. Ultimately, this is a market that I think continues to see a lot of volatility and choppiness, with the 50-day EMA sitting right at the $3,900 level.

Sideways is Good

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The market has definitely been sideways over the last week and a half or so, and that does actually lend credence to the idea of perhaps the market being somewhat comfortable with being as bullish as it has been. That being said, we have also seen a lot of volatility and a lot of selling pressure leading up to this point, so we'll have to see whether or not we can hang on to this area. I'd pay close attention to the fact that the 50-day EMA sits just below, because if we were to break down below that level, then it could very well open up the possibility of a deeper correction toward the $3,800 level, maybe even the $3,500 level.

EURUSD Chart by TradingView

This is a market that has been overdone until recently. And now the question is, did we peak? Did we find the absolute height? Or did we just simply pull back in order to find a little bit of value and be able to take advantage of some type of bounce that could come into this picture? Ultimately, I think you have to be cautious. I think the longer we go sideways, the better off we're going to be as far as the bullish run is concerned.

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