Gold broke a trendline last week. In addition, there have been two gaps down since then. Both the 10 and 20 day SMA are moving lower and the 10 day SMA has crossed below the 20 day SMA.
Also note the MACD went lower as prices topped and
The on balance volume was decreasing, indicating fewer people were participating in the rally.
So -- why did this happen? Part of the answer is simple market psychology -- nothing increases in price forever; at some level traders take profits off the table. However, I have to wonder whether or not people are re-thinking the "inflation scare" concept. The bottom line is there is a ton of slack in the economy from high unemployment and low capacity utilization. This is not an inflation environment. That makes gold a less attractive investment -- at least for now.
