Gold is now testing lower support levels below 1,280. The decline looks impulsive and despite some small pauses in the downward move, resistance levels are not even tested. The trend is descendant and our primary bearish scenario that implied that the move from 1,180 to 1,349 is corrective and becoming stronger day by day. The bullish alternative is not canceled yet, but it has few chances of survival.

It is clear as shown above in the daily chart that the upward move from 1180 is a three wave correction and the downtrend resumes as expected. The bearish scenario is getting stronger as the price has broken down and is out of the upward sloping trend channel. We believe that the next support level of 1266-60 is going to be tested and broken. The longer-term resistance level is at 1,349 high. The longer-term support level is at 1,260-70 area. We believe that the price is going to trade lower and break support levels.

The downward sloping trend channel as shown in the 1 hour chart may provide some short-term support. However, the short-term resistance at 1,290 and 1,306 is not expected to be broken easily. We have been short from 1,340 and we continue to prefer being short with a lowered stop at 1,320. We expect in the longer-term the price to test the lows at 1,180 and even make new ones.