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Pro: Time to Sell Gold

AP

Friday's close will be critical for gold.

Although gold was able to recover from the lows it made toward the end of Thursday's session and into Friday's, the nearly $20 selloff took a lot of wind out of the sails for the bull camp. Gold has continued lower, as it tried to hold major support at $1,437.50 to $1,438.80 once again, but as the old saying goes, the third time's the charm.

After recovering above resistance to reach a trading high of $1,461.20 Thursday night into the pocket of that day's initial lows, outside markets helped to add to the downside pressure.

In a risk-on trade, equities are seeing a continuous bid, which steals gold's luster. Also, a weaker yen that has now gone below the $1 level adds to the pressure in the gold market.

Now that the market is below the major $1,437.50 level, and running stops, look for the next level of support to come in at $1,428 Friday.

However, the move below $1,437.50, and now the inevitable violation of our $1,437.50 to $1,487.50 range trade (which was fun while it lasted) will turn this market immediate-term bearish, likely bringing the market to the $1,402 to $1,404.20 level.

If gold closes below $1,437.50 or $1,438.80, the ultimate downside target becomes $1,383.90. A hold and a close back above here, and furthermore $1,444, will be crucial in order for this market to repudiate this early negativity.

Rich Ilczyszyn is the founder and CEO of iiTrader. Follow him on Twitter: @RIlczyszyn

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