As the U.S. dollar continues to gain across the board, gold markets have experienced a sharp decline this week. Ultimately, as long as the US currency remains strong, this market will continue to struggle with the idea of holding onto gains. Furthermore, a significant support level has been broken, so I believe gold has further to go. The $1680 level had been significant for quite some time, and now that we are well below it, I cannot see how gold can continue to advance. Ultimately, this is a market in which I will seek shorting opportunities on every bounce, and it is probable that we will see a great deal of them.
The $1500 level below is a reasonable beginning target, but I would not be surprised if the market also broke below that level. The magnitude of the candlestick is reasonable, and it suggests that prices will decline in the long run. However, I am aware that the gold market is somewhat volatile and can be quite noisy at times. In light of this, I believe you should exercise extreme caution and acknowledge that you should not immediately go in with both feet.
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This market, given sufficient time, could even fall to $1,200, and I do not believe it will change its attitude until the Federal Reserve does. It does not appear likely in the near future, so I anticipate continued selling pressure. In light of this, I maintain my bearish stance.