Last week the “Power of the Pattern” suggested that the time was ripe for Gold to fall hard, since it hit its 61% Fibonacci resistance level and Gold was repeating key patterns from the past. (See post here)
CLICK ON CHART TO ENLARGE
The above chart reflects that GLD and SLV broke hard and fast below support line (1) this morning and GLD finds itself on channel support line (3) at (2).
No doubt support is support and it should be respect a ton!!! For very aggressive traders, one could consider buying GLD here with a comfortable stop below this line.
Last week Bloomberg reported that inflows to Gold were hitting record levels (see gold inflows) . With inflows hitting records and Gold reflectign weakness, most of the time that is not a good sign. Odds increase with the inflows this high, this support line will not hold.
This is a similar situation to the condition of Gold on 8/23, the morning Gold hit its highs for the year (See post here) Should GLD support not hold a great support line comes into play around $134 on GLD.