Gold plunged lower by almost -3.30% after Ben Bernanke stated he will adjust the central bank’s balance sheet as needed to assist the economy and the ECB began its massive liquidity injection for 800 euro zone banks. Gold prices spiked higher after the ECB allotted a record EUR530 bn in its 2nd offer of unlimited 3-year loans earlier in the day, higher than the EUR489 billion allotted in the ECB’s first liquidity operation in late December. Market expectations for the size of the operation were in a range of EUR200 billion to as high as EUR1 trillion. Wednesday's offer attracted bids from 800 banks operating in the euro zone, significantly more than the 523 banks participating in December's offer. Under the operation, banks receive three-year loans in return for collateral at a rate fixed to the ECB's refinance rate of 1%. Together with the first auction, the ECB has now injected EUR1 trillion of 3-year funds into the system. But the high uptake on the operation sparked concerns that banks in the region expect liquidity pressures to continue throughout the year. However gold started spiraling lower as Bernanke stated that keeping monetary stimulus steady was warranted despite falling jobless claims and rising oil prices potentially increasing inflation. Now technically market is trading in the range as RSI for 18days is currently indicating 43.88, where as 50DMA is at 28162 and gold is trading below the same and getting support at 27495 and below could see a test of 27038 level, And resistance is now likely to be seen at 28666, a move above could see prices testing 29380.

Trading Ideas:

Gold trading range for the day is 27038-29380.

Gold plunged lower after Ben Bernanke stated he will adjust the central bank’s balance sheet.

Pressure seen after the European Central Bank began its massive liquidity injection for 800 euro zone banks.

SPDR gold trust holding gained by 9.07 tonnes to 1293.68 tonnes