Gold has seen a massive pullback since hitting almost 1,400 an ounce on March 17th, but silver has been on the decline since topping out just below 22 back on February 24th.As the Federal Reserve makes clear that it intends to end its third quantitative easing program by December 2014, fundamentally bullish stances on Gold and Silver begin to breakdown in the near term at these current levels. If we take the argument that fundamental support only remains if we see the Fed keep ‘the punchbowl’ available, then bearish arguments begin to take hold, especially at the confluence of resistance levels at this current metal tops.
If we are to take the bearish stance in light of recent developments and failed breakout attempts, fundamental support comes in near the 2013 lows. Historically we have seen gold price supported where the average producer breaks-even and that is currently estimated to be around the 1200 handle. Gold and silver have not been the only metals to take a hit over the past week. Those traders watching copper prices will note that the metal continues to press fresh year lows.
For more insight into some of the complexities to Chinese credit markets, read up on recent price action in copper as on Wednesday it was slammed to three and a half year lows!
Gregory Marks, DailyFX Research Team
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