On a technical perspective, the spot price of gold has reversed its uptrend when it broke down from a 2-year double top formation after a massive sell-off last April as seen in the weekly chart above. By gauging the height of the mentioned chart pattern and added to the breakdown point, a target price of 1,200.00 could be achieved. Since the precious metal is ranging around the 1,400.00 level at present, there is still room for it to drop by 14% based on the double top’s target.
If we zoom gold’s chart to the dailies, there may be a bearish symmetrical triangle or a large inverted pennant forming as for my analysis. Based on the triangle/pennant’s size and added to the possible breakdown point, the commodity can tumble all the way down to hit the double top’s target of 1,200.00. On the way down however, it needs to slide through the 1,325.00 hurdle. On the flip-side, in case gold bounces back up, the immediate resistance could be 1,425.00. If that breaks, the next one could be 1,488.00.