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Gold will face a rocky week; here’s why

Jeffrey Coolidge | Digital Vision | Getty Images

Russia reported overnight that ballistic missiles were fired in the Mediterranean, which led to some concerns that a strike on Syria could be getting underway. These launches turned out to be Israeli missile tests, but the bottom line is that until the Syrian sideshow is behind us, we can expect continued volatility.

(Read more: Russia raises alarm over Israeli missile test)

Gold found itself sliding into the open on Sunday night of the holiday session, reaching a low of $1,373.60. The market stabilized quickly, and hugged the $1,391.80 lows from Friday for most of this long session.

Major support will now come in at our $1,383 to $1,384.10 level, which was held Tuesday morning. A close below this band of support will be bearish as we head into nonfarm payrolls on Friday. We would expect a retest to press the market lower, putting $1,352 into the cards.

(Read more: Gold steadies ahead of data, monitors Syria crisis)

Although gold faces directional uncertainty, and it is unlikely that you will see any big bets made this week ahead of nonfarm payrolls, you should still keep your trades short and continue to use the levels. Remember that between the jobs report and a critical FOMC meeting on Sept. 17 and 18, traders have a lot to look forward in the next few weeks.

On Tuesday, $1,401 will be resistance, as this session's high is $1,399. Only a close above the $1,407 resistance will help neutralize this bearish activity, and encourage a possible test to the top side of the range at $1,422.30.

Rich Ilczyszyn is founder and CEO of iiTrader. Follow him on Twitter @iiTrader.

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