(MENAFN- Daily Forex)

• Gold opened with a downside gap before reversing and selling off again, showing persistent volatility.
• Price action around $4,000 and the 50-day EMA is critical, with a break lower risking a deeper slide toward $3,800 and potentially $3,500.

Gold initially did gap lower to kick off the trading session on Monday but then turned around to fill that gap, only to sell off yet again. All things being equal, this is a market that I think continues to see a lot of volatility. And, interestingly, we fell pretty significantly later during the session. The $4,000 level is a large, round, psychologically significant figure that I think continues to show a lot of interest in the market, I think extending down to at least the 50-day EMA. The 50-day EMA is currently at the $3,947 level and rising. So, we'll have to wait and see whether or not the 50-day EMA does in fact hold. If it does not hold, that ends up being a very bad sign.

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Ultimately, the $3,800 level is your next target. After that, you have the $3,500 level. Ultimately, this is a market that I think continues to see a lot of choppiness and questions asked about the direction of gold. And while I do think it's difficult to short this market, it's hard not to recognize that there's a very real world in which we have just seen a significant topping pattern.

EURUSD Chart by TradingView

Quite often, you will see the market shoot straight up in the air and then sell off with big volume. It will attempt to recover and then roll over again. If we make a new lower low, it is a classic topping pattern, and gold probably shrinks quite a bit. I'm not ready to call that yet, but I will say this about gold. It is not behaving well, and that is something worth paying attention to now that everybody online is talking about how gold's going to $5,000 an ounce. It very well could, but it's not donated anytime soon.

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