Technical Update: A Look At The Key Support For Gold At 1240

Gold futures have continued to sell-off this week partly in reaction to the strong U.S. Dollar, but also in reaction to what appears to be the stopping-out of the “inflation trade.” Gold and silver both don't look too good, technically, and appear like they could move much lower in the short-term -- especially if gold breaks support on a closing basis Friday. Based on the chart, the key support for gold appears to come in at 1240.20 (gold is trading at 1231 and change as of 11:30 a.m. EST Friday). If the 1240 support for gold falls by the wayside, then the next level of potential support does not come into play until the December 31, 2013 low of 1183.80. Friday is the key day for gold according to technicians. It must rally to hold above the 1240.20 level or the chart becomes even more troublesome for the bulls.