June 17, 2013 – Gold (daily chart) has formed yet another short-term bearish pattern – this time a small inverted pennant pattern that, if fulfilled, could drop the precious metal further down within its entrenched bearish trend. From both medium-term (extending back to October 2012) and short-term perspectives, the trend on gold is clearly to the downside. The dramatic plunge in mid-April made a 61.8% Fibonacci correction to the upside immediately after the drop, but that recovery attempt dissipated and price has since been unable to climb back up.
Most recently, gold formed a rising wedge (generally considered a bearish pattern) that found strong resistance around 1420-25. As was indicated, price subsequently broke down below that wedge and then formed the current small triangle/pennant pattern. This pattern is also generally considered potentially bearish, provided there is a significant break of the pattern to the downside. In this event, price could decline towards a retest of the 1320-area low (last hit in mid-April), and then further down towards objectives around 1265 and 1160.