The following chart provides a picture of the technically weak posture brought on by today’s hedge fund selling barage. Asian buying had been providing very good support on dips below $1800, particularly into the $1780 zone. That buying was overwhelmed today by the West jettisoning gold as the algorithms were all tripped into the sell mode on account of the rallying Dollar.
The result was to take gold through all of the support levels that had been holding it thus far. Both today’s low and the 50 day moving average are the last line of technical chart support preventing a dip towards psychological support at the $1700 level. Below that, should it fail to hold, there is a former gap region near $1680 which should provide pretty solid support if this thing is going to stabilize. If not, it does have the potential to dip lower and move towards $1650.
On the upside, it needs to get back above $1800 to put a little doubt in the mind of the bears. A run through $1820 would see some sizeable short covering on their part.
It needs some help from the lagging HUI, which was slammed incredibly hard today.