Gold price has reversed from $1,340 and moved towards its lows near $1,320. Gold has short-term support at $1,318-19. If this support holds, we could see an upward move towards $1,340 again and, why not, towards $1,350 near the 38% Fibonacci retracement. The decline in Gold price could also be counted as a 5 wave down move as shown in the chart below, and we currently are in wave B, or wave B has finished and we are about to start wave C up.

However, if a new lower low is made, then the entire wave count from the $1,391 highs changes and the decline will not be impulsive. If a new low is made, then we can say that this downward move is part of a larger correction process that could push price towards $1,280-60. The impulsive wave down scenario is preferred as there is high probability the breakout of the long-term downward sloping trend line as shown in the chart below is just a false breakout.

If this is a false breakout, the downward impuslive move implies a strong reversal from the $1,390 area and that is why prices are falling in an impulsive pattern. As always the form and pattern of the price movement is very important in order to determine if the decline is part of a larger correction that will eventually resume upwards and push Gold price towards $1,500 or if the rise from $1,180 has ended at $1,391, and we are now to resume a big move down to new lows. Concluding, we prefer long positions with $1,318 stop and $1,340 target for today.