Metals down despite indicators that would suggest otherwise
Risk on equities are up and challenging multi week highs. The euro is at its loftiest level since early May of this year. Crude oil is up for the third day in a row. Precious metals are… down?!?!? Gold ran up briefly in the Asian trading session before selling off gently as the European day meandered on. Once the US markets entered though, key levels broke down in gold and silver as sizable futures volumes caused further liquidation. The correlations in the markets seem increasingly difficult to understand these days with year-end approaching. Some of the pressure on the metals today may stem from homebuilder confidence in the US coming in at its highest level since April 2006. Even though the euro is strong in the face of this news, it is being interpreted as a sign that things in the US are not as dire as previously construed (they are, and sentiment will change again shortly). With this sign that the US market is turning though, the necessity to hold safe haven assets such as gold becomes less vital.
Gold held above $1,685 support four times in the last two weeks. Once it broke through it today though, stops were triggered and a swift move downwards followed. For right now, support is holding at the previous low from early November of $1,670. Should this give way, more substantial long term support comes in at the 200 day moving average of $1,660.50. With gold looking obviously heavy after a day like today, the 200 day moving average should be tested in the short term.
