Gold pulled back for a second day yesterday after the Fed revealed that no third round of quantitative easing is on the table -- as yet -- and left the shiny yellow metal back under pressure as former inflation hedges flowed back into the U.S. dollar.
Bullion maintains its "benchmark currency" status here although that picture is clouded as risk trends still appear to be looking for a clear direction both here at home and in Europe.
At the moment Europe seems to be in control, in sending prices lower.
Price is currently piercing support at $1,604 on solid volume, or $160 on the ETF ( GLD , quote ). The 10-day moving average has now been broken, suggesting an even further follow-through from the gold bears.
Today's close will help provide some clarity on whether the bulls can mount a reversal here or if the bears have the momentum to push price down to the -1.618% Fibonacci extension target.
Gold bulls should consider sidestepping the downdraft until price forms a bullish candlestick formation at a support level.
Silver's ( SLV , quote ) price action today is bouncing off current support at $28.72 --- a break below will suggest price is seeking out $25.92.
A close below the $25.92 support could send price below $20.00 before silver finds its footing.
This will also break the upward Fibonacci wave and reverse the wave to the downside, creating a real possibility of giving up this year's gains.