Gold price made a strong downward reversal yesterday and broke our short-term support at $1,216. We expected gold price to move towards $1,200 once this support was broken and this is exactly what happened. Gold price stopped the decline just above $1,200. Now prices bounce, but this bounce is weak and I cannot rule out a new downward move to $1,190.

Blue trend lines = bearish flag

Gold price is moving sideways with a slight positive slope. The price is most probably consolidating before the next move down. This could be a bearish flag pattern formation. This is a bearish sign. As long as gold price is below $1,225, the trend is bearish for the short term.

On the weekly chart above I show how the price got rejected at the weekly cloud resistance; and now it has broken below both the tenkan-sen and the kijun-sen indicators. If this week closes below the kijun-sen (yellow line), it will be a very bearish sign with high probability of this downward move for gold accelerating to new lows.