Wild volatility in gold
What changed in the gold market in the past two days?
The main thing is the reversal in US Treasury yields. There has been an increasingly tight correlation (and more talk) about falling yields propelling gold. When US 10-year yields held 0.50% and reversed to 0.67%, that was the cue for some to sell.
Given how overcrowded the gold trade became and a trickle of selling quickly turned into a flood as weak hands were shaken out. Toss in mixed US fiscal signals and it turned into a mess.
The selling accelerated in early European trading and gold fell as low as $1863 but has since bounced $60 to $1943. It's been the same story but even more dramatic in silver.
So what's next? This is a time when a fibonnaci retracement comes in handy. We're flirting with the 38.2% retracement of the drop from the high at the moment. The 50% level is $1969 and the key 61.8% level is just below $2000.
In short, declines are likely continue, or gold will move sideways, unless $2000 is retaken
