Dan Norcini: Gold crashes through support at $1680

Gold crashes through support at $1680

by Trader Dan

With the mass exodus out of safe haven trades today and into stocks, gold is being sold off with the idea of taking those funds and plowing them into the equity markets to catch the rising tide.

The result of this long liquidation has been a breach of a very important downside support level near $1680 on the charts. The market is holding within the support zone noted that extends down past this level but it will be critical to the metal to hold today’s low and last week’s low if it is to prevent a further bout of long liquidation that could very quickly take it down to $1620 or even lower.

Keep in mind that the short term oriented traders are now looking at getting long the broader equity markets, particularly tech, and are thus reducing exposure to gold. It is going to be a challenge for the metal to maintain its footing as long as the “GET LONG EQUITIES” mentality is in vogue.

The Dollar is a bit higher today but that is not the main driver for gold in this session; rather it is the theme of getting long equities that is dominating. The Fed has been successful, FINALLY, in herding the hedge funds and other large institutions into equities and they are going to ride this bull as long as they possibly can. Those fearing contagion effects from European Sovereign Debt woes have been overrun by the sheer amounts of liquidity being provided.

As it stands now, even the massive build in overall US indebtedness is no where remotely near the forefront of traders’ minds.

This entry was posted in Dan Norcini Gold Analysis, Gold, Technical Analysis, Trader Dan's Market Views. Bookmark the permalink.

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