Spot Gold is continuing its losing ways on Monday. In fact, the metal is getting crushed today. Spot gold is trading at $1357 per ounce currently and is down well over $100 per ounce today. Technical selling that began a few sessions ago has battered the yellow metal which has seen prices fall about $250 per ounce over just the last three sessions.
It is difficult to determine what exactly caused all of the selling. No one seems to be able to pinpoint a single event or catalyst for the breakdown in precious metals prices. Although many of the reasons for being bullish gold that were being touted by bullion buyers just several months ago are still intact, perhaps it is gold’s failure to stage a meaningful rally in light of those factors that has caused investors to exit the metal.
In other words, gold has had many reasons to potentially move higher. Global money printing, sovereign debt issues, the fear of inflation -none of it has been able to propel gold prices over the $1800 mark. In fact, gold prices have traded sideways for the better part of a year and a half, staying range bound from $1550 to $1800.
The cluster of sell orders on gold once this range was clearly breached to the downside drove prices down fast and hard. This rapid sell off has very likely caused many more of the intermediate to longer term bulls to exit positions as well. Essentially, this has created a cascade effect. The market has blown through several potential areas of support on the way down, and no one knows where the selling will subside. The potential for more downside is not only very real at this point but is also likely until either some catalyst comes along to spark buying interest in the metal or the selling simply exhausts itself. We’ll see which comes first….
In the meantime, it is important for buyers of physical gold bullion to look at this sell off with some perspective..The fact is that gold has been in a nice uptrend on the yearly time frame for many years now. Markets do not typically go straight up or straight down and gold is no exception. Looking at buying gold with the long term in mind however, this sell off could prove to be nothing more than a buyable pullback at more favorable price levels. Gold may be getting hit right now, but the metal has many saving graces and will shine again!
