Gold Sell Off

Gold witnessed a massive sell off yesterday which was mostly due to technicals. The precious metal was trading in consolidation around $1,320 for several days before finally giving up on the thought of going higher.

Yesterday Gold reached a low of $1,268 and is currently trading at $1,271. The sell off was very sharp so post selling pressure might continue to drive price lower to a possible first target of $1,257.

If we reach $1,257 today it would be a very good moment to enter long with a stop at $1,248. If we continue to stay on the same level around $1,270 it would be best to wait for a confirmation to see how this scenario plays out.

It's an interesting chain of events currently happening in the markets as we have a historical low Sterling, a very strong US dollar, a weak Euro and a very strong Yen. All of this could indicate a potential crisis that would wipe out all overexposed portfolios.

Chart: XAU/USD H4