Ugly day for gold
The rout in precious metals has taken another turn for the worse. Gold is now down $102 to $1926, or 5%. Silver is down nearly 13%.
It's a classic rush to the exits after a parabolic move higher. It has coincided with a jump in yields and a declining chance of further US fiscal stimulus (i.e. less debt monetization). Better economic sentiment is also weighing.
Where does it stop? $1921 is a good spot to watch but even if the selling stops, it doesn't mean that buyers will suddenly step back in. There are plenty of reasons to like gold but some consolidation is overdue.
The next near-term level to watch is $1921, which is the 2011 high. Beyond that,there will be stronger hands buying at $1800.
The reality of precious metals is that they're tough to value and that makes them tough to stop on the topside, and on the bottom.
