Gold Selloff Isn’t Over: Pro Trader
Long-term gold holders are in the cross-hairs again.
After trading to new yearly lows and then falling below $1,320, gold on Thursday reached its lowest level since September 2010. Friday's session has seen gold enjoy a slight profit-taking bounce to retest a high of $1,301.70.
As the dollar rallied on Thursday, with the Dollar Index stretching back above 82, commodities across the board saw tremendous pressure in dollar terms. The Dollar Index was slightly negative on Friday, and you can expect a close below 82 to support gold. However, a retest of Thursday's highs and major resistance at 83 will be very bearish for the metal, as well as for other commodities.
(Read More: Why I Became a Gold Bear: Pro Trader)
The momentum is obviously pointing down. We expect the trade to pause right here, but only a close back above $1,323 will neutralize the selloff. Look for resistance at $1,305 to remain in place, and a close above this level could signal a consolidation higher for a session or two.
Support on Friday's session will come in at $1,280. Traders have to look back to the mid-April selloff to remember how important the closing values were to momentum, and how quickly this market traded. Be sure to use a stop and measure your risk.