Gold broke support at $1490/ounce, the base of a bearish descending triangle. A sharp drop on the Trend Index warns of strong selling pressure. Respect of secondary support at $1350 would signal that the primary up-trend is intact, while a test of primary support at $1270 would warn of trend weakness.
Silver similarly broke support at $17.50/ounce, with an even steeper fall on the Trend Index warning of a strong decline, confirming the Gold signal.
The cause of the sharp fall is clear: long-term Treasury yields are rising, increasing the opportunity cost of holding Gold. 10-Year Treasury yield breakout above 2.0% would warn of an up-trend, with an initial target of 2.50%.
The All Ordinaries Gold Index continues its downward trend channel, towards secondary support at 6000. Declining Trend Index peaks again warn of selling pressure. Respect of 6000 would signal that the primary up-trend is intact, while a test of primary support at 5400 would again warn of trend weakness.
Patience is required
Gold is in a long-term up-trend and a correction may offer an attractive entry point. But we first need to confirm that the up-trend is intact before increasing exposure to gold stocks.