Why I Became a Gold Bear: Pro Trader
Bullion is feeling the pain, dropping well below $1,300 after Wednesday's Federal Reserve statement delivered a decisive blow to gold prices. The prospect of a more responsible Fed has led to a buoyant dollar and a sharp selloff in precious metals.
I have fought this move for a long time, but I've now come to a new conclusion. I finally realize that it's not a question of the Fed's level of accommodation—which is clearly high—but of how the Fed's policies compare with those of other central banks. Right now, the Fed is the one central bank that is considering tighter policies, and that seems good enough to keep weight on gold prices, even if those tighter policies are enacted at an undetermined time in the future.
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Ultimately, though, the thing that pushed me to the bearish side is the way the market views gold. Despite instability in many global markets on Thursday, traders never considered rushing into gold for protection, as they might have done in the past. This is the sign of a sentiment shift.
(Read More: Gold Falls to Near Three-Year Low as Investors Bail)
From a technical standpoint, a consolidation triangle has been violated to the downside, making $1,150 my long-term downside objective. A trade back above $1,340 would make me to change my mind and return to neutral.