Gold has been on a tear for the last seven months, rising by a thrilling 29% in a year, much of it powered hedge fund money of the hottest sort. So a serious bout of profit taking is overdue. With US equities, particularly financials and tech stocks, the flavor of the day, you can count on many of them to take profits on the yellow metal and reallocate to paper assets. The fact that the world is now solidly in a “RISK ON” mode also solidly favors some gold liquidation.
The easy target here is the October support level of $1,320. If we get some good momentum going, traders will start throwing up on their shoes, and we could touch the 200 day moving average at $1,270. My friend, technical analyst to the stars, Charles Nenner, thinks that in a worst case scenario at gold could plunge to as low as $1,000