Gold slumps to three-week low, breaks support

London (May 27)  The gold chart has been narrowing in the past month in a wedge formation but today it’s breaking out to the downside. Gold is off more than $14 to $1277.

Bullish headlines from India, Ukraine, Libya and Thailand all failed to spark a sustained gold rally last week and the series of lower highs continued. It’s a story of an asset that couldn’t rally on good news and is now getting flushed.

Wedges can be dangerous but EUR/JPY earlier this month is an example of one that worked according to the textbook. This time I’d wait for a break of the May low of $1273 to confirm the breakdown.