There looks to be more short-term pain ahead for gold investors as the yellow metal breaks through support at $1,720 and momentum indicators show a continued downside bias.
Chart courtesy of BullionVault.com
A close below $1,720 would allow gold to move towards lower-level support at $1,700 or $1,680, and such a move certainly seems likely with the stochastic oscillator signalling continued downside momentum.
There is major support down at the $1,615 area, however is seems unlikely given the monetary and economic backdrop that gold would fall that far. Each time gold falls we see major buying by central banks and other savvy investors which quickly puts a floor under the price.
Personally I hope we do see gold make a double bottom at the September low as it would present an excellent buying opportunity.