Gold pullback extends to start the session, silver also down by 9% on the day now

The pullback is getting violent

Gold has fallen to a low of $1,907 on the day as the sharp fall continues following futures touching over $2,000 earlier in the day. Meanwhile, silver is tailing off to a low of $22.32 or down by 9% after having touched just above $26 in Asian trading earlier.

As mentioned yesterday, the $2,000 mark may be a bit of a stretch for gold given how rapid the rise has been since firmly breaching the $1,800 level at the start of last week.
Historically, the parabolic moves in the commodities space tends to lead to violent pullbacks and today is but an example of that. For some context, the high for gold today was $1,981 and we are trading nearly $70 below that now.

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Gold has room to overshoot to the topside

Commerzbank technical analysis on gold is looking for it towards $2000:

  • is on course for the 1921.50 September 2011 high
  • there is room for an overshoot to the top of a 49-year channel at 1983.00 … our long-term target …  should hold the initial test and provoke some profit taking
  • Forays above 2000 are expected to remain short-lived”  

Support is offered by the 55-day ma at 1797 

  • and the four-month uptrend at 1795
  • Below 1795 lies the 1765 May high. This guards the 1670 June low.

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