The price of gold is down 5 per cent on Wednesday as investors shun risk and the U.S. dollar climbs. After dropping almost $100 an ounce, bullion prices have stabilized a bit, recently trading down $74.10 an ounce at $1,589.
The selloff has pushed the price of the precious metal below its 200-day moving average (about $1,614) for the first time since January 2009. That has created an intense battle between the bulls and bears, with technical analysts putting the bears’ psychological target at $1,600 and the bulls’ at $1,700.
“Fresh, serious near-term technical damage has been inflicted in gold this week,” writes Kitco News contributor Jim Wyckoff.
Bloomberg is running a story quoting technical analysis from Stifel Nicolaus & Co. that says gold could quickly descend to $1,400 an ounce now that it has broken through the 200-day moving average.
Bullion’s fall comes on the heals of more bad economic news out of Europe. Industrial production in the Euro zone rose 1.3 per cent in October from a year earlier, significantly short of the 2.1 per cent that had been widely expected.
At the same time, Italy saw the price it had to pay for five-year bonds soar to a new high for the euro-zone, at 6.47 per cent. That put pressure on the euro currency, which broke below the important threshold of $1.30.