In thin Asian trading conditions on Sunday night, gold plummeted $50 in a matter of two minutes. Over a million ounces traded on the electronic exchange in that time span with gold falling from $1,130 all the way down to $1,080 as stops were triggered and momentum selling pushed it lower. The five year low at $1,080 lasted for mere seconds as algorithmic traders lifted it immediately to recover to $1,110. While several background stories were going on at the time of this tremendous market move, there really didn’t seem to be one definitive catalyst to warrant it. Some market analysts attributed the move to the prospect of higher US interest rates, but this has been a developing story for quite some time now anyway. Others pointed to a disappointing rise in gold reserves for the People’s Bank of China. Whatever was the cause of the selloff, we are in a new range for gold now.
The $1,080 level is clearly support for the time being and is actually the third point in a trendline dating all the way back to 2006. Resistance is coming in at $1,130, the previous 5 year low and the level where gold broke down from on Sunday night. Any rally in gold will likely be sold ahead of $1,130. Coin and bar physical demand in the US remains strong. Most non-sovereign mint fabricated silver products are delayed until at least September and premiums have risen to meet demand. Gold remains more readily available but is starting to see some delays on certain products as well. Call to check in on availability and premiums as they are subject to change rapidly and without notice in these volatile markets.