Gold topped on Sept 6, in concert with the Swiss Nat'l Bank announcement that it would peg the Franc to the Euro. Now, this does not mean that the SNB announcement was a catalyst for the recent weakness/unwind in gold, only that the announcment helped to carve out the topping pattern.

Key Observations Since the Sept 26 low:

1. The 3 week cluster of candles on the (embedded) daily chart from Sept 27 to Oct 17 shows gold is having a great deal of difficulty sustaining a trade above the US credit downgrade bull gap low at 1678. Moreover, the pattern off the Sept 26 low appears to be a bit of a bearish rising wedge, out of which it is falling with today's bear gap down. And the RSI off the Sept low is pathetic........

2. Today's gap down below yesterday's 1667 low on the daily chart is an ominous sign. Moreover, the candle forming today is known as what is called a bearish belt-hold, signaling that the bears are in full control today and pushing the bulls around at will. This is an indication that there is apt to be considerable further weakness to come in the days and weeks ahead.

3. Key short term support on the daily candle chart is 1625 and 1629 on the 30x4 P&F chart. The support line on the P&F chart is supporting 1629 today. While a bounce off of this 1625-1629 zone would not surprise today, a failure of 1625-1629, if sustained (and does not immediately mean revert) would be an ominous sign that will put the Sept 26 low at 1532 in jeopardy.

4. The gold unwind from Sept 6 may be about to resume sooner than later.

Click on image to enlarge!

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