An Ugly Day For Precious Metals Prices

New York (May 16)  Yesterday was an ugly day in the metals, especially for gold. Silver had its troubles but is holding up much better from a technical perspective. Gold sold off hard, breaking down into a blow-off formation, while silver just hovered around support.

For gold bulls, Tuesday’s trade should turn out to be bullish with the blow-off pattern selling on heavy volume. Gold is very close to our $1,280 target, although $1,260 could come into play. Once $1,280 shows, we will be ready to start buying when support holds.

Most markets go farther in each direction than we expect. Another big selloff in gold could take it below $1,280. If that happens, we will turn to a shorter time frame on the charts looking for the shorter time frame to hold. We have turned buyers at the right levels and the right conditions. We will look to buy at $1,280 as long as the short term chart confirms, once that level has been met.

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