My last note highlighted the trigger points for the recent collapse in gold's price (ie the break below $1594), so I won't repeat those technical reasons today. Since last month's note, the price has fallen sharply to retest the line representing a decline of 25% from the secondary high in October 2012. The fall – to a level of $1346 – also took the price down to meet its next rising time-angle in the sequence, that of 12 points per month (originating from the 2008 low and displayed on the chart, in red, as 12x1m). Some support, therefore, was to be expected. It is isolated support however, and I expect the much stronger support in my target band will be tested in due course.
Last week's bounce in the price is not a game-changer. In fact it barely registers as a blip on today's long-term chart. Only a reversal in price to above $1594 would abort the recent downtrend and can be used in setting stop-loss policy.
Recommendation: Stay short. Target $1275. Stop-losses can be activated on momentum above $1594.