While the June gold contract managed to bounce six dollars from yesterday's low into its close, prices have started the Tuesday trade under fresh pressure and seemingly poised to take out yesterday's low of $1285.30.

With equities starting out positive again, Citigroup touting a "bullish turn" in the Chinese economy and US treasuries suggesting the US economic outlook is also improving it appears as if gold and silver are suffering from rotation toward equities.

In fact the PBOC overnight has contributed to the upbeat view toward China as they have suggested they will continue to provide liquidity but will make sure the liquidity will be controlled in the face of an improving economy. Clearly safe haven liquidation from declining global economic uncertainty is in play.

While probably not a material addition to the current downward motion on the charts, press reports of Venezuela selling up to $400 million in gold (despite sanctions to prevent such action) adds to the Bears resolve. However forecast from S&P global of 10th straight year of higher world gold output last year and forecasts of production gains of 2.3 million ounces again this year, casts a dark shadow over prices.

Even the technical condition in gold favors the bear camp with prices starting out under pressure and closing in on a fresh downside breakout. Therefore we suspect the $1285.30 level will fail to hold and the odds of a slide down to $1282.20 shouldn't be that difficult.

To add insult to injury ETF's yesterday sold both gold and silver holdings with gold shedding 90,933 ounces and silver reducing holdings by 106,830 ounces.

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