Gold is down by 1.8% on the day now as the 'sell everything' mood continues to grip the market over the past week. It has been a fall from grace for gold after hitting $1,700 as price now falls back to test the 200-day MA (blue line) @ $1,500.03.
Break below that and the bias in the commodity will turn more bearish from hereon. Hence, this will be a key spot to watch in trading today. A bounce off this level would prove good for buyers but we'll have to see how the rest of the week plays out.
Sovereign selling and funds liquidating gold to meet margin calls are among the reasons cited for the decline, despite the current risk environment and that central banks around the world continue to cut rates - with even the Fed bringing rates to near 0% today.
Whatever the case is, the technical picture also has not supported gold during the past week and if price action isn't behaving as you would expect it to, now still isn't the time to bet on gold rising from ashes just yet.
I still view that the long-term prospects in gold to be intact but until there is a turnaround in the technical picture, it is hard and unwise to try and pick a bottom in gold for now.