Gold futures are dropping like stones again today after a big selloff yesterday.
The shiny yellow metal is down 2.2 per cent in morning trading. It’s had a particularly rough start to the year:
Earlier this morning, gold hit a low of $1626 per ounce, but has bounced back to gain about 10 bucks.
In their Daily Metals Outlook this morning, Deutsche Bank analysts wrote:
Gold traders were pretty confused yesterday. The FOMC minutes caught many on the wrong foot. In principal the early December FOMC meeting was already forgotten, as the subsequent speech from Fed Chairman Ben Bernanke didn’t indicate any surprising insight. Taking a closer look to the minutes now one can see, however, that Bernanke’s speech a month ago, was likely an interpretation of his own viewpoint, which obviously doesn’t fully match with the opinion of several other members of the committee. Whilst he doesn’t support the idea of an end of the Bond purchase program this year, other Fed members do. This time, it was obviously not only Jeffrey Lacker who expressed reservations. Only few members would like to see the buying to be finished at the end of 2013, while several others are inclined to act even earlier (slowing or stopping the program). Market participants are now puzzled: How many could finally vote for an earlier end on the next meeting?
Since gold stopped its recovery attempt just $1.5 ahead of our 1696.00 stabilisation key, it reversed direction sharply. Yesterday, it violated our critical $1665 near-term pivot, which means the metal is now likely to retest its December $1635.50 trough and then the 1616.00 support/potential. The negative view will remain, as long as the 1670.00 resistance stands.
The last two days of trading have also put gold below its 200-day moving average, another critical level for followers of technical analysis.