Last week we suggested gold had got ahead of itself and that chasing gold longs was a late trade. We wrote:

Much of the “logic” for the recent gold move was stemming from an increased fear, but people have confused that the NASDAQ fall out yesterday has little to do with the overall market. The move in yields (another long gold logic) is also rather late as yields easily could snap right back up. Lastly, for inflation fears, forget gold.

Gold is falling hard today as the huge 1350 ish level proved to be resistance that still holds. Forget trying to push gold above that level for now.

The 1350 area is a huge resistance and continues to hold.

Our logic around gold ebbed out into a view of slightly falling or consolidating prices. The best trade for that view we expressed as:

Our view is that gold needs to consolidate or retrace some of the sharp gains. We would actively be looking to sell premium as part of the trade to capture a slight fall/consolidation in gold

Gold volatility works inversely to equity volatility dynamics. Gold volatility comers off when gold goes lower. The price action today managed taking the gold vol index lower substantially, but it is still elevated and offers further interesting trade set ups given our view.

Our general market bounce view is coming to an end, so any possible sell off in equities, and part of the gold short logic could quickly change, as for now the only thing in our view that could take gold above the 1350 level would be an explosion in VIX.

Source, charts by Bloomberg