Gold price tumbles...moving away from its moving averages
New York (Oct 21) Gold took a quick tumble lower for no apparent fundamental reason. Technically, the pair had been consolidating with the 100 hour MA at the 1176.63 level, the 200 day MA not far away at 1175.29 and the 100 and 200 bar MA on the 5 minute chart near those levels as well (see 5 minute chart and overlays of MAs)
Looking at the hourly chart, the fall has taken the precious metal to lower trend line support. That line comes in at 1164.66 area. The price is testing this level hard at the moment.
Risk for shorts will now be centered on the 200 hour MA which comes in at the 1170.22 area (green line in the chart below). A break and further run, will have gold looking toward the 1158.087 area. This is the 38.2% of the move up from the October low.
Looking at the daily chart, golds peak last week, reached the 50% of the move down from the January 2015 high. That level came in at 1189.07. The high reached 1191.21. That failure may have also contributed to some traders taking profit on the break lower today. If it cannot break above a key technical level, traders get nervous. The break away from the MAs and the inability to get above the 50% are reasons for nervousness (and can encourage shorts too).
Spot silver is also down more than 1% at $15.72...while platinum and palladium are also hit hard. See charts: