Gold Breaking Down

On Thursday gold broke down below important support, declaring, in our opinion, that the bear market rally from the June low is over. Today the decline continued, but at a much slower pace, so we should probably look for a short snapback rally very soon.

Hope is fading on the weekly chart as well. While there is a nice, clean PMO bottom and upside crossover, the weekly PMO topped today.

Conclusion:   As of 8/21/2013 Gold is on a Trend Model BUY signal. The LT Trend Model, which informs our long-term outlook, is on a SELL signal as of 2/15/2013, so our long-term posture is bearish. The long-term technical backdrop is negative, and the mechanism at work is that of a collapsing parabolic. We expect that gold is eventiually headed for a retest of the June lows, and when they are tested, we do not expect them to hold.

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Technical analysis is a windsock, not a crystal ball.