precious metals flash

Those hoping Bernanke would confirm their QE expectations yesterday, remained disappointed, as he left all doors open. As Gold had well profited from these hopes lately, it came by no surprise that long holders would run for the exit. Interesting was that the 1600 USD level held for quite long, as it took one hour and 6.3 Million ounces changing hands on the Comex August future until it gave way. Another 4.3 Million ounces would then trade in the next 30 minutes to find support at 1580, before the market came to rest. China had lowered interest rates by surprise, which had driven risk higher. Fitch had fired on the US and the Eurozone, threatening to cut the AAA of the Americans in 2013, if they didn’t come up with a fiscal plan by then, while a Greek exit would automatically trigger downgrades for Cyprus, Ireland, Italy, Spain and Portugal. They wouldn’t however wait long and after Europe had gone home, cut Spain by three notches to BBB with negative outlook. Gold did not react on theses news and while already trading in Asian hours suddenly went to test another round of stops. This time only 200’000 ounces would trade on the break below 1580, leading to a low of 1555.40, a 22 USD drop in a matter of seconds. The CME rose margins on Short Option Minimum rates, which might have been misunderstood they had done it on futures positions. Fact is that the chart now looks negative again and if 1600 cannot be reclimbed , a fresh attempt at previous lows can be expected. 1550 and 1530 might be the levels to watch on the downside, while 1580 and 1600 might squeeze some shorts out if broken. This weekend will see Chinese trade data, which might influence markets on Monday.