Has gold drop run its course?

The gold price dropped on Monday September 22nd to USD 1212 and EUR 942. Dollar gold is close to retest its bottom for the third time since mid-2013, a price level which was seen only in the summer of 2010. For readers seeking to understand what is going on, we are providing a comprehensive view on the gold market. We take all perspectives into account: price and chart patterns, the technical picture, sentiment, the fuures market, physical demand, gold miners, the influence of the dollar, correlation with commodities, monetary policy and inflation/deflation. We also compare several indicators with the low price points in April, June and December 2013.

With 20 different charts, it should be clear that we have only used market data in our analysis. In other words, this article contains the necessary information for readers to put the current gold price decline in its right context and explain the most likely scenarios going forward.

The daily USD gold chart clearly shows a downtrend since its top in September 2011, with two large trading ranges. The current trading range, between USD 1180 and 1450, is about to undergo a serious test: the bottom of the trading range is being tested. In case the USD 1200 to 1180 price level does not hold, the gold market is heading (significantly) lower.

In case the gold price would trade in a lower trading range than the current one, would it mean that the bull market is over? The answer to that question primarily lies in the gold price chart of a larger timeframe. As the  chart shows, there are three long term trend uptrend lines at play, which primarily found their origin in the period between 2001 and 2004. The first of the three lines provides support at USD 1100. The price point at USD 1000 provides major support as it coincides with a local top in 2008 which was retested several times in 2009. It implies that USD 1000 – 1100 is a major support area within the secular bull market. It goes without saying that, if that area would be violated, it could invalidate the long term gold bull market.-Gold Sliver Worlds