Well, it had to happen at some point. And yesterday’s heavy selling and profit-taking certainly underscored the potential pitfalls of the consensus trade. That continued into Asia trading today, with gold having fell to a low of $4,004 earlier. However, dip buyers stepped in near the figure level and gold is now up well above $100 from the lows today. Price is now trading marginally higher on the day at around $4,128.
The drop yesterday accelerated in US trading, not helped by an earlier dip in silver below $50. And that dampened the mood for precious metals on the day itself. A lot of it has to do with profit-taking and corrective price action, as one can come to expect more volatility spikes amid such a heavy consensus trade in the market over the past two years.
And even with the drop yesterday, it hardly puts a dent in gold and silver amid the surge higher all throughout this year.
For now, the inability for sellers to break below $4,000 still shows that dip buyers are holding on to relatively modest appetite. That even as we see a break under the key hourly moving averages above.
The next challenge for dip buyers now will be to try and get back above the 200-hour moving average (blue line). That is seen at $4,174 currently. If sellers can hold that line, we could see more profit-taking and corrective action down the road. But if dip buyers nudge get past the key level, it sets up another potential run up as the buying continues to pile in.
This article was written by Justin Low at investinglive.com.