Precious metals plummet as liquidation occurs

by Joe Oliver, Forex Trading-Pips

Precious metals plummet as liquidation occurs

FX Street.Com

It was a rough day for risk assets in general, with precious metals suffering the worst of declines as gold closed down 5.5% to finish at 1276 and silver collapsed 8.32% to finish at 19.52.

US Dollar maintains firm bid, ‘risk assets’ stumble post FOMC

Analysts at NAB global shared some thoughts on the recent action in the markets, noting ‘risk assets’ have struggled across the board as the DXY continues higher. “It’s been a dreadful 24 hours for investors and the rot hasn’t stopped yet. Overnight Europe’s stocks tanked, the worst Paris, the CAC losing 3.7%. Gold investors are also taking a bath, the metal down 6.8% overnight.” NAB went on to comment, “Australia’s currency continues to be hit, with fresh lows overnight, in a generalised sell-off against the US dollar, which has risen by 1.7% in the past day. “

In conclusion, NAB added the catalyst for the dramatic moves continues to stem from Bernanke’s comments during yesterdays FOMC press conference, specifically the fact Bernanke mentioning that should incoming data continue to improve, the committee views it appropriate to taper asset purchases later this year.

Technical picture continues to point to lower prices

The technical damage suffered in the precious metal s today was beyond severe, with bids disappearing as key support levels were taken out which led to further liquidation. The steep declines could lead to a short term bounce as we close the week, but a “sell the rally” mentality is likely to prevail overall. Initial resistance in gold now sits at 1302 (the 20dma on 1 hour chart), followed by 1335 (previous support, now resistance on daily chart). Initial support sits at 1250, followed by 1220 (support on monthly chart). Initial resistance in silver sits at 20.09 (20 dma on 1 hour chart), while first support sits at 19.40…More at Precious metals plummet as liquidation occurs

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