A break of trend line support at 1310 will open the way for a further decline towards 1300 and 1290, with 1272 not far below that. In our opinion, gold is headed back to 1180 and unless there is a significant correction in equities or a resurgence of Middle East tensions, gold is going to struggle to rally.
The economy continues to improve, albeit in fits and starts, the end of QE is approaching one way or another, interest rates are rising and inflation remains subdued. This is not an environment in which gold will prosper and the systemic turmoil of the period of 2008-2011 could well prove to be a multi year, if not multi decade, peak.
However, there are many problems remaining in the world economy and the amount of debt still being created in the Western economies is a serious issue that still has not been addressed in any meaningful way - until it has, gold still has a role to play.
We are traders and make money in both bull and bear markets by going long and short, we are unconcerned about gold's ultimate destination or what the gold price will be this time next year. We trade the charts on a short to medium term basis, with positions open for anything from a day to three weeks - anything longer term is of little interest to us as traders.
Today's video for subscribers looks at the recent trading and the "head and shoulders" pattern on the daily chart in more detail.