In fact, on longer-term charts I can make an argument for gold going all the way down to the $1200 level.
Obviously, a few lines on the chart don’t really tell the story, nor did they cause the market to do anything. The interest rates in America climbing had a lot more to do with this than anything else, as higher interest rates tend to make gold less appealing as there is no return on gold other than price appreciation. The fact that there is no interest earned makes it a lot less attractive than a bond that is starting to earn interest beyond inflation, at least in theory, as it’s easier to hold paper then it is tons of gold.
At this point in time, it looks as if the market is ready to continue going lower and I anticipate the gold will probably find its way down to the lows, followed by the $1600 level. I also believe that the $1600 level is a minor support level based on psychology more than anything else, and I fully anticipate seeing this market drop down to the $1500 level. In fact, on longer-term charts I can make an argument for gold going all the way down to the $1200 level. If interest rates continue to climb in the US dollar is almost unstoppable, it does make sense that gold will continue to be like a punching bag, right along with most other major currencies.
We would have to take out the $1750 level to the upside in order to look bullish, and even then, I would need to have some type of reason to get long other than crossing a trendline. We are in a downtrend, and that’s probably the most important thing to pay attention to, because trends don’t change rapidly. In other words, I think you continue to fade rallies and show signs of exhaustion in this market as it clearly has a preferred direction.