However, with major support at 1525-1530, we did not think there was a high likelihood of this happening, though the possibility was never ruled out and we were always on alert for this scenario.
On Friday, we saw the event we had previously speculated occur - gold sold off steadily all morning from 1560, dropping through support at 1540 and quickly falling to 1525 before a brief bounce. Although we suspected this level would hold, the bears could smell blood and went in for the kill, driving gold back down to 1525 and breaking through at the second attempt on huge volume.
As expected, gold dropped in precipitous fashion, finding initial support at 1490 before bouncing, though the relentless selling quickly returned to push the market down to 1477 by the close.
We warned our subscribers that a gap down was possible on Sunday night and although this did not occur, the market sold off hard again, dropping all the way to 1426 before finding some support, though again the price looks weak and more declines look sure to follow. Where the market will find support is difficult to say, though we have identified a couple of potential support areas for our subscribers.
We went short on the break of 1525, closing out this morning at 1452 for a $70 gain.
Today's video for subscribers looks at Friday's trading in more detail, some potential areas of support and our strategy for our next trade.