Gold Plunges; Mr. T Rejoices

Within the last couple of days, gold futures

have been under pressure, mainly after Fed comments for the FOMC meeting. On Tuesday, the Federal Reserve released its last FOMC statement of the year, killing a 100 point rally in the Dow in the process, and with it, most commodities, including gold. While the Federal Reserve's statement was fairly bullish for the U.S. economy, the Fed did not hint at any more quantitative easing. They also said that inflation has moderated since earlier this year, and that long-term inflation expectations are stable. The Fed ended its inflation commentary, saying that they expect inflation to settle at an acceptable level and will pay attention to changes in inflation expectations going forward. Without hints at a new quantitative easing and comments that inflation is more under control than it was at the beginning of 2011, gold futures plummeted. Gold fell over $35 per ounce after the 2:15 p.m. announcement. The plunge did not stop there. Italian 5-year yields rose to a record this morning as Italy paid a record of 6.47% to sell five-year paper at its first auction of longer-term debt. This comes after Friday's EU Summit where countries in the Euro Zone moved towards greater fiscal integration, however, these countries failed to plant bullish sentiment into the markets. Just after 5:00 a.m., gold futures begin to move lower. This slight downtrend continued until the precious metal fell violently just after 8:30. When U.S. equity markets opened for trading, gold had already fallen about $45 per ounce at $1618 where it tested its 200-day moving average. All this major support level did was to delay the inevitable. Gold's decent slowed at the 200-day moving average but ultimately broke below it in violent fashion. Until today, the precious metal has not traded below its 200-day moving average since January of 2009, and when it broke below this, gold fell $53 per ounce more, before making an intraday bottom at $1565.70. Gold was not the only thing that fell in spectacular fashion. There were similar moves in silver, copper, crude oil, RBOB, natural gas, and obviously, equities. The global debt issues continue to worry investors, and as they worry, they begin to raise cash. Most fund managers and commodity traders alike say, in today's day and age, when major hedge funds need to raise cash, they will liquidate their positions in gold. This could be the reason for the dramatic sell-off in the precious metals. Currently, gold futures are down over $90 per ounce at $1669.00