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Focus was on comments by Fed members who continued to talk up the possibility of December tapering. Heading into the business end of the week, Fedspeak is set to remain the dominant theme with Ben Bernanke and Janet Yellen set to speak. This will set the tone for the US dollar and in turn, gold.
While our initial trade idea was to sell gold on a rally to the 1,300 region, yesterday I also suggested a momentum play on a break below 1278. The 1278 region is the 61.8% retracement of the recovery from 1182 lows to 1434 highs which took place between July and September. Any traders who went with a momentum play can target a move down to 1352, which was the mid-October low.
Gold printed a low of 1262 over the past 24-hours and a daily close near these lows in Asia would be a sign further bearishness is on the way.