GoldPlunges Below Support
Gold - $1348.93 // $2.65 // 0.20%
Commentary:Gold fell through support on Thursday, plunging $23.65, or $1.73, to settle at $1346.28. An excerpt from our latestGold – FOREX Correlations report:
“…As for gold specifically, we saw a significant breakdown this week, with the metal finally breaking through support near $1360 after several attempts. As mentioned previously, interest rate expectations have been rising for many of the major central banks, spurred by hawkish commentary from certain policymakers and an uptick in inflation. Market expectations, as implied by overnight index swaps, suggest that the European Central Bank may raise rates three times over the next twelve months (75bps total). Expectations for the Bank of England are only slightly lower.
Meanwhile, gold ETF holdings have tumbled almost 1.6 million troy ounces since their recent peak, an indication of that investors are selling the metal. As investment demand has been the single most important driver of gold prices on the margin, the impact is significant.We can’t be sure whether the aforementioned increase in interest rate expectations is what is spurring this selling, but it is likely one of the many factors impacting trading.”
Technical Outlook:Prices have taken out support at $1361.39, the intersection of a horizontal barrier and a rising trend line set from late October. Sellers now target the bottom of a falling channel carved out from January’s swing high, now at $1325.08.
