Gold off a cliff down to familiar key support at $1,221

Gold is off to the cleaners on the back of Yellen, tumbling from a high of 1221.46 down to 1235.46 the low so far. 

Gold has been in direct correlation to DXY this year so far. The price has been moving in tandem within the ebbs and flows of this strong dollar dominating-market that we have seen ever since the Trumpflation and Trumpeconomics had infected the minds of the dollar bulls expecting this new Presidential administration to promote pro-business campaigns and fiscal government spending within a protectionist regime that should benefit the dollar. 

Yellen's optimism and hawkish rhetoric:

• Waiting too long to tighten would be unwise - Fed's J.Yellen
• More rate hikes may be appropriate in upcoming meetings - Fed's J.Yellen
• Fed's Yellen agrees with core principles of Trump's executive order on financial reform

However, whether this will come to pass is yet to be seen, although Yellen was certainly optimistic today and a number of headlines of her rhetoric is driving the buck higher and the yellow metal off a cliff. There is indeed the case for a weaker dollar policy to come from Trump's administration in that case of an outright currency war that the US has so far stayed clear of, but recent remarks and noise on the street should be something to remain cautious of, such as: Bloomberg headline: WSJ: "US said to eye new currency strategy to pressure China"

Gold levels

We are down to test the 200 smoothed ma at $1,221.69 where the metal is finding some initial support post-Yellen's remarks. This could prove to be a tough area of support given the highs seen January and double top on the daily sticks. A break below here opens a case for $1,180.50 (26th Jan. support). A correction tot he upside in coming days could target 6th Oct. low at $1241.43 before an outright break through $1,280.