Gold faced selling pressure yesterday afternoon due to all the shorts in the market and investors re-balancing positions for year-end tax purposes.

Gold faced selling pressure yesterday afternoon due to all the shorts in the market and investors re-balancing positions for year-end tax purposes. Since equities are at all-time highs, traders sold off the AU to realize losses to offset their capital gains. AU continued to decline until the end of the day due to a stronger U.S. Dollar and the Fed’s decision to begin tapering in January. AU futures fell more than 3%- lowest level in over 3 years. Investor sentiment for the yellow metal remains bearish since its appeal as a hedge against inflation has waned. Buying into the AU during this downtrend is like catching a falling knife-there is a lot of risk involved in this type of scenario. If buying the dip is timed correctly it can be rewarding, but if gold prices fall faster than predictions you run the risk of cutting some fingers off!! Since gold broke below 1200, we can expect to see testing levels between 1200-1180.  AU is down approximately 30% for the year while the S&P 500 is up more than 26% for the year. Looks like investors felt it was a better bet to flee from AU and put their money into equities. Third quarter GDP is up 4.1%. Have a wonderful weekend and Happy Holidays to those of you who are on vacation until next year.