Pro: Why Gold is Still a Short

Gazimal | The Image Bank | Getty Images

Gold failed to punch through the $1,696 - $1,696 major resistance level on Wednesday to show $1,700 once again. The inability to do so alone caused investors and traders to lighten up long positions, as we saw a very sharp sell-off at the close in Europe.

(Related: Will Gold End 2013 Higher or Lower?)

Although major resistance was not broken during Wednesday's session, it closed right above it, and continued lower last night. Last night's low was $1,675, which puts it below the next support level. After seeing support at the $1,682 - $1,684 level for days, this will now be a tough area to trade back above, and we expect to sell the first test. At these levels, we are likely to see a consolidation that can extend as low as the $1,667 area. However, we maintain that only a close below $1,666.4 will signal a reversal that would press the market another $20 lower. However, a close below $1,641 should send this market down to test $1,600.

If you followed Tuesday's short gold trade, you are short from $1,684.0. Roll your stop down to break even at $1,684.0. Our price target remains $1,668.

Watch "Futures Now" Tuesdays & Thursdays 1 p.m. EST exclusively on FuturesNow.CNBC.com !

Like us on Facebook! Facebook.com/CNBCFuturesNow

Follow us on Twitter!@CNBCFuturesNow

Contact Futures Now

  • Showtimes

    Watch Futures Now Tuesdays & Thursdays 1p ET exclusively on cnbc.com!

Sponsor Links

  • CME Group brings buyers and sellers together through its CME Globex electronic trading platform and trading facilities in New York and Chicago.

  • Take your trading to the next level with a platform that lets you trade stocks, options, futures and forex all in one place with no platform or data with no trade minimums. Open an account with TD Ameritrade and get up to $600 cash.