Gold fell below $800 supports

Commodities continued to be on the downward trend as gold plunged on continued strength in the dollar. Other major currencies also fell against the dollar as concerns over slowing economic growth outside the U.S. put pressures on commodities and gold.

Gold jumped up $7 during Asia morning opening hours possibily from short coverings but faced selling pressure around $800 level. The latest COT report shows commercials(gold miners and swap dealers) are buying back substantial amount of gold to close their short positions in this selldown.

World Gold Council reported that gold demand in Saudi Arabia fell 15.5 percent to 35.9 tonnes in the second quarter of 2008. Similarly, the demand in the United Arab Emirates also fell 10.7 percent to 26.6 tonnes in the second quarter of 2008.

These news would certainly hurt the confidence of the gold bulls in the near term.

If you look at the gold chart below, in technical analysis, a double top is formed and its neckline broken. We could be looking at a selldown to $660 - $640 level.