The first hour of trade on Wall Street has been positive. U.S. indices are in the green, led by the DJIA posting a 200+ point gain. Gold is the big loser on the session as investors continue to flip the switch from “risk off” to “risk on.”

June gold futures broke hard beneath Wednesday’s low of 1336.0 shortly after yesterday evening’s electronic open. The area around 1336.0 acted as firm support and a catalyst for a nice 16 tick late-day scalp. As soon as this area failed, sellers dominated the action.

At press time, it appears that the backers of bullion are attempting to make a stand at a key daily support level.

Gold Technicals

June gold futures are off over 100 ticks. Price has fallen consistently throughout the session and looks to be trending lower.

As I write this, price is in the vicinity of the Daily SMA. If the action breaks beneath the 1328.9 level with vigor, look out below!

Here are the levels to watch for the remainder of the session:

• Resistance(1): Daily SMA, 1328.9
• Support(1): 78% Retracement Current Wave, 1323.4
• Support(2): Swing Low, 1312.4

Overview: Action is definitively bearish, threatening to extend the session’s losses. The 78% retracement level at 1323.4 is going to be key moving forward. I expect price to rotate between this level and the Daily SMA for the rest of the session.

If the 78% retracement does not hold up as downside support, a test of the Swing Low at 1312.4 is in the cards for Friday or Monday.