Gold has recently been in a correction (or consolidation) after a very steep rally.
It appears as if Gold is at a critical juncture at present. As seen in the chart below (which depicts Gold on a daily basis, LOG scale, since 2008) Gold, at $1594.60/oz, is currently right below both the 200dma (depicted in red) as well as the rising trendline (recently broken to the downside) since early 2009:
(click on chart to enlarge image)(chart courtesy of StockCharts.com; chart creation and annotation by the author)
From an overall Technical Analysis standpoint, on both daily and weekly viewpoints, Gold appears vulnerable to a (significant) decline.
I have recently written of the broader implications of Gold’s price movements. In one post, that of August 25 (“Gold And Deflationary Pressures“) I wrote the following, which I feel is still currently applicable:
I am very closely monitoring Gold as I believe a steep, abnormal correction could serve to (further) indicate deflationary pressures – which of course would have outsized impacts on financial markets, the economy, and economic policy (particularly QE3 or some other large intervention.)
The Special Note summarizes my overall thoughts about our economic situation
SPX at 1265.43 as this post is written