By Steven Russolillo
- Associated Press
Gold prices fell into bear-market territory this morning, but analysts still say don’t buy this dip.
Friday’s 4.5% slump has pushed the precious metal below $1,500 an ounce for the first time since July 2011. Gold is now down more than 20% from its record settle high of $1,888.70 set in August 2011. A bear market is defined roughly as 20% down from a recent peak.
Traders and analysts said Friday’s sell-off lacked an obvious trigger, and reflected the malaise that has gripped the gold market. A steadying U.S. economy, relatively strong U.S. dollar, and worries that the Federal Reserve would curb its easing measures have hit demand for gold and other precious metals.
Gold prices recently fell 4.1% to $1498 an ounce.
From a technical point of view, today’s drop has been quite ugly and could portend more trouble ahead. From Miller Tabak’s technical guru Jonathan Krinksy:
“The December 2011 low on spot gold was 1522.65. A close below that level is very significant to the medium and long term trend. Next support is really not until 1475-1480…As we mentioned this morning, gold is far from oversold on a daily time frame, so we would not be in any rush to buy this dip. The 1480 area also coincides with a trend-line off the 2011 peak.”
Also, this just hit our inboxes from the folks at Phoenix Partners Group:
“The downtrend in gold has accelerated in its decline during today’s trading. Over the last 30 months, gold traded in a descending triangle pattern. Technically, this pattern resolves itself to the downside. Today this commodity has breached its 150-week moving average intraday and is threatening to break the psychological level of 1500. If this pattern is valid and this breakdown is valid, over the longer term we can set a technical price objective of 1300. However, we first need confirmation that this breakdown is valid.”
–Tatyana Shumksy and Matt Day contributed to this report.