This morning, gold has resumed the decline, dropping as low as 1371 in early trading and looking set for a return to 1338 or, more likely in our view, 1321.
We expect gold to breach key resistance at 1321 and make a new low, with 1280 and 1250 likely targets. An extended sell off to 1150 is possible, though less likely, and would be seen as an excellent buying opportunity should it transpire.
We continue to note that the recent decline has not been driven by dollar strength at all, a very worrying sign for the bulls. The dollar has sold off hard since failing to break key resistance at 81.50, however this has not translated into a rally in gold.
The recent weakness in equities has not seen any movement back into gold, though the S&P has bounced off our target of 1600 and looks to be resuming the uptrend. A break of 1600 may well see some capital return to gold, as this would suggest a deeper decline in stocks.
Today's video for subscribers looks at the rece