Massacre on Gold Prices Continues

NEW YORK (TheStreet ) -- Gold prices were struggling to recover Thursday after a brutal selloff pushed gold through pivotal technical levels. 

Gold for February delivery dropped $9.70 to settle at $1,577.20 an ounce at the Comex division of the New York Mercantile Exchange but was continuing lower in after hours trading. The gold price has traded as high as $1,596.50 and as low as $1,562.50 an ounce while the spot price was down $9, according to Kitco's gold index. 

Silver prices added 33 cents to close at $29.27 an ounce while the U.S. dollar index was shedding 0.27% at $80.31. 

Gold failed to reclaim the $1,600 an ounce level after Wednesday's session left gold in the intensive care unit. Leading the charge out of gold was a stronger dollar and technical selling. Once gold broke below its 200-moving average of $1,618, many sell stops were triggered -- where traders are forced to sell to protect profits, which further accelerated losses and activated more sell stops. 

Gold failed to reclaim the $1,600 an ounce level after Wednesday's session left gold in the intensive care unit. Leading the charge out of gold was a stronger dollar and technical selling. Once gold broke below its 200-moving average of $1,618, many sell stops were triggered -- where traders are forced to sell to protect profits, which further accelerated losses and activated more sell stops. 

"Was it panic selling?" Asks Jeffrey Wright, senior research analyst at Global Hunter Securities. "No, more program selling that overwhelmed the bids that were in the system." Wright thinks gold's massacre and subsequent volatility is predicated on short term headlines and a lack of resolution out of Europe as well as light volume. "As we get closer to holidays there are less market participants and less on the retail side ... when you have a sharp event and you don't have the breadth of market liquidity it can make these moves sharper because there is no one to participate."

Gold Thursday did close off of its session lows, but the question is just how much damage was done.

Source; http://www.thestreet.com/story/11346767/1/gold-prices-fight-to-recover-after-carnage.html