The sell off has brought gold perilously close to the critical June low at 1180 - we have maintained for months that if this level falls, gold is likely to decline sharply towards 1000. We may not have to wait long for this, though we expect support at 1180 to hold on the first test at the very least.
The trigger for the recent sell off was the FOMC decision to initiate tapering of bond purchases, also known as Quantitative Easing, on Wednesday and the yellow metal is in serious danger of further sharp falls as the dollar recovers and equities move ever higher.
Support can be found at 1188 and 1180. A break of 1180 would have serious bearish implications for gold and suggest a decline to 1000-1050 in the short term.
Resistance can be found at 1200, 1210, 1220-1225, 1237-1240, 1245, 1250-1255, 1268-1270, 1277-1280 and 1291-1295. A break above 1250 would suggest an end to the short term down trend, though it would take a break of 1300 to suggest a more significant rally was developing.
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