Gold Now Approaching Critical Support- Watch Trading on Tuesday
Downward pressure in gold prices continued as very large funds liquidated substantial portions of their positions in the gold ETF (GLD). Naturally, we need to look at the charts to give this story some context. (Charts were made before the close.)
The daily chart shows that price has reached the bottom of the declining trend channel, the top of which is drawn from the October high. This was something we thought likely because price failed to reach the top of the channel before it started down again. Another important event that happened today was that the 50-EMA crossed down through the 200-EMA, signalling nominally that gold is in a long-term bear market. The same type of EMA crossover occurred back in May 2012, so, obviously, the "long-term" nature of the signal is not carved in stone, but it does set the tone for the gold market.