Still Shorting Gold below 1230

FX_IDC:XAUUSD   Gold Spot / U.S. Dollar
83 0 5
Since the FOMC meeting last week, shorting Gold             has been a war of attrition. As I previously opined, the snap higher in Gold             immediately following the uber dovish minutes and non-sensical presser was a snap re-pricing. That doesn't mean that sentiment shifted, just that prices received a new input/wake-up call. The USD will regain strength off the back of accelerating inflation , better than expected US macro data, soon-to-be-realized fears of the Fed being markedly behind the curve, and uni-directional market positioning.

The hourly H&S target at 1240 was supportive yesterday, but the price action since hasn't been constructive in the least. The terrorist acts this morning caused a rushed bid in gold             that just happened to coincide with support off the H&S target and rising bull trendline . I'm calling that area of support artificial and expect price to crash below it. From there, we're looking to the 1230 consolidation zone from prior to the Fed.

Convention, post FOMC was to buy gold             . We'll see if those who piled in > 1250 maintain their bullish views 20 pts lower. I suspect they won't, and believe there's a strong possibility of a sentiment change after Friday's PCE data that will usher in a new leg lower in the yellow metal.
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