Gold attempts to regain footing after yesterday’s Fed-inspired plunge

Gold attempts to regain footing after yesterday’s Fed-inspired plunge

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TDC Note – In less than 24 hours – just shy of a 50% retrace.

by Michael J Kosares for USA Gold

Gold is attempting to regain its footing after yesterday’s plunge.  It is up $3 at $1935.  Silver is up 35¢ at $27.13. Though analysts posed a number of reasons for the plunge, the most plausible connect it with the release of Fed minutes yesterday revealing a reluctance among board members to cap yields on the long end of the spectrum. Adding to the downside was the continuing mire in Washington over the stimulus package.

Credit Suisse released its latest analysis of the gold market saying that it expected the current consolidation and that although it sees “the core trend as higher … there is scope for a more protracted consolidation phase to unfold first.” It sees the first line of support in the $1837-1867 range and raises the possibility of extended weakness, if that level does not hold, to $1726-$1765. “Post this phase,” it goes on in a summary of the analysis posted at FXStreet, “we look for an eventual move above $2075 with resistance seen next at $2175, then $2300. Whilst we would look for a fresh consolidation at this latter level, a direct break can see potential trend resistance at $2417, with scope seen for $2700/20 over the longer-term.”

We emphasize that all of the foregoing is one firm’s technical opinion and that, at a time when abrupt, event-driven direction changes and surprises are the rule of the day, anything can happen.

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