Who stole the gold? The yellow metal's dramatic fall from $1,340 to below $1,260 is a break-and-enter theft on a grand scale.
It's going to take a while to find out who stole these profits from open long positions. But what's more important is to assess the extent of the damage and the potential for recovery.
Let's start with damage assessment. The fall below the historical resistance and support level near $1,290 is critical. It would be reasonable to expect that this level would provide support for any retracement but instead gold fell straight through this level. Chalk one up for the bears.
The uptrend with gold was well defined using a Guppy Multiple Moving Average (GMMA) indicator. The long-term GMMA was well separated and this generally shows strong buying support from investors. The upper edge of the long term GMMA was a little above the historical support level near $1,290. The fall below the upper edge of the long-term GMMA is not good. Chalk another one up for the bears.