Gold could be in the process of breaking down. Tuesday’s failure at 1500 could lead to a turn in direction as well as a turn in sentiment. We will maintain our long position through today looking for Gold to retake the 1500 level. If gold fails again to hold the 1500 level, we will reverse.
The action in metals has been ugly with 5 consecutive down days. The fall through 1500 has caused heartburn and concern. There are still areas of support that we can cling to in the short term, we are ready to reverse, but the sell off has been on light volume indicating that the weak hands are selling versus a real breakdown.
If we know one thing about markets, there are sell offs that are based on technical breakdowns which lead to reversals. Then there is the fear and panic variety, the breakdown in gold has been somewhere in between and today will go a long way in determining which sell off we have here. We will hold our longs through today and decide our next move after we see today’s action.