This is exactly what happened, with gold selling off sharply all day on Friday, closing at the lows of the day near 1325. Overnight and this morning the selling has continued, with gold making a low of 1313 before finding trend line support and bouncing back above 1325 to currently trade at 1327.
We expect a complete retrace this week and are looking for gold to retest 1300 as a minimum, with 1272 a distinct possibility and a break of this level suggesting a return to 1180.
Equities remain very strong which is a major factor for gold's weakness. We have maintained for many months that a significant rally in gold will not occur unless we get a meaningful correction in equities - this does not look likely at present.
Even more worrying for the bulls is the weakness in dollar at the moment, however gold is unable to capitalise on this at all - a warning sign of the underlying weakness in gold.
Today's video for subscribers looks at Friday's action in more detail and our strategy for our current trade.