Late Session Selling coming back into Gold

Both gold and silver have seen the return of sellers late in the session as the vigorous buying that marked the early part of the session has seemed to have runs its course for now. This is occurring while the mining shares are surrendering some of their gains. There still remains about an hour or so of trading in the equities before the bell rings so there is time for a last minute surge of short covering/fresh buying, but what started off looking like a very strong day in the mining sector appears to be fading. We'll see what happens on the close.

As far as the metals go, the short covering that took place earlier today was nearly identical to what we experienced on Wednesday this week. In both cases price had dropped down to the $1210 level where it uncovered very strong buying. That reinforced this level as important chart support but what it also did was force some of the bears to once again cover after they sold the rally. The resultant short covering brought in some fresh bottom picking which scooted the market sharply higher but then the bulls disappeared.

This leaves us with the downtrend still intact but with bears probably getting a bit nervous about just how much downside remains in the market.

The gold shares MUST CONFIRM a bottom is in this market before I will feel comfortable that the worst is over for gold. If the shares cannot move higher, there is a good chance that bears are going to attempt another retest of that $1210 level once again. That level is now HUGELY important from a technical analysis standpoint.

Silver could not regain the $20 level. It still remains a teenager. Price action in there is disappointing to say the least.

It is going to be interesting to see the Asian response to all these theatrics come Sunday evening.