Warren Buffett Moves on Bank of America, Risk on Trade Moves Gold Lower

Gold prices continued to plummet this morning as news of Warren Buffett buying 5 billion dollars worth of troubled Bank of America preferred stock hit the news wires. Rumors were already supporting the equity markets as traders suspect Federal Reserve Chairman Ben S. Bernanke may announce steps to boost the economy in his speech tomorrow from Jackson Hole in effect putting the risk trade back on in equities.

Gold was sharply lower in overnight trading and has broken out below the 20 day moving average crossing at 1740.60 as it consolidates some of this year's rally. Stochastics and the RSI have turned bearish signaling that sideways to lower prices are possible near term.

Closes below the 20 day moving average crossing at 1740.60 would confirm that a short term top has been posted while opening the door for additional weakness in to early September. Closes above the 10 day moving average crossing at 1796.10 would signal that a short term low has likely been posted.

First resistance is the 10 day moving average crossing at 1790.10. Second resistance is Tuesday's high crossing at 1915.00. First support is the overnight low crossing at 1701.70. Second support is the 38% retracement level of this year's rally crossing at 1686.80. Gold pivot point for Thursdays trading is 1788.60.