Gold broke the Head-and-Shoulders neckline on Friday and pushed below the support area of 1,270-80 towards 1,260. Prices are moving downwards in an impulsive pattern breaking support levels and are now back testing the support level at 1,270-80.

The bigger picture remains bearish with 1,200-1,150 as the most probable target area for this downward move is to end. The chart above shows how weak gold is right now. Prices are making lower lows and lower highs and are unable to break above the red downward sloping trendline from 1,433. We remain short-biased and one could add to its short position if prices break below 1,270 with 1,240-50 as a take profit.

The short-term resistance level is 1,277 and then 1,286. The short-term support is found at 1,270 and 1,262. The upward move looks corrective as prices have an overlapping pattern and there is no clear impulsive move upwards. These signs favor the bearish view that there is more downside for gold over the coming days. Expect prices to fall sharply and fast towards 1,200-1,150.