Yesterday we saw relentless selling all day in gold, with the market dropping sharply on the break of the 1596 low from Friday and again dropping hard on the break of the lower trendline boundary at 1585.
The market eventually found support at 1558, though overnight has made a new low at 1554.
We are now very close to our 1525-1550 support zone and, with RSI on the daily and now weekly charts at historically low levels, we cannot see much more downside from here.
It is now apparent that gold is forming a major low, from which we believe a huge rally will unfold, targetting an initial high in June/July this year.
However, should 1525 be broken decisively to the downside, we will begin to consider that the bull market in gold is over and much lower prices ahead (1300 as a first port of call). This scenario makes little sense when we consider the macro economic outlook, negative real interest rates and clear currency wars emerging around the world, and little sense from a technical perspective with gold so oversold.