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Gold Prices Crash on Large Sell Order

Gold prices crashed yesterday in what was a surprise move as far as the traders and the markets were concerned. We had mentioned in our forecasts over the last couple of days that the gold prices are likely to bounce towards the 1260 region where they are likely to face a lot of selling and that this would in turn lead to a resumption of the downtrend. Though we had predicted this move back into the 1240 region, we did not expect the move to be as fast as it was. It is believed that the crash in the gold prices was due to a large sell order coming through and that the sell order was atleast a couple of billion in size and this caused the prices to crash towards the 1240 mark within a couple of minutes. So far, the buying support at the 1240 region has managed to hold the prices and it remains to be seen how long this would last.

Gold Prices Fall And Continue Under Pressure

The dollar has also been gaining in strength across the board since the release of the strong durable goods data and if this dollar strength continues in the short term, we should see the gold prices coming under pressure and pushing through the 1240 support and this is then likely to move the prices towards the strong support at 1220. Though it is the last week of the month when the economic news and events generally dry up, this week is likely to be different as we have many Central bank leaders making their speeches and this is likely to bring in a lot of volatility in the markets.

Gold Hourly
Gold Hourly

Oil prices have recovered slightly during the last 24 hours as the tension in the Middle East continues to dominate the headlines as far as the oil markets are concerned. The tension is escalating on a daily basis and with one side involved in this tension, wanting higher oil prices in the medium term, there is a very large likelihood of this tension escalating into a conflict which should push the oil prices higher. This is what the bottom trawlers are probably hoping for, as the production and inventory data are totally against them and they dont stand a chance if they rely exclusively on this data alone, to help them.

Silver prices also crashed for a brief while, inline with the crash in the gold prices, as it moved towards the $16 region but it has managed to recover in a much faster and better manner than gold as it trades above $16.5 as of this writing. Despite this, we expect the silver prices to remain under pressure in the short and medium term.

This article was originally posted on FX Empire

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