Gold Holding near Secondary Support Level, but is struggling

As you can see on this shorter term chart, gold has broken the nice STAIR-STEPPING PATTERN that had been in plce since the middle of August. The overhead resistance at $1,800 has proven to be too formidable for the bulls to overcome and thus the market has set back due to a combination of both stale long liquidation and fresh shorting against this resistance line.

The market is probing lower looking to see at what price level more demand, especially on the physical market, can be generated. It is important that the line marked, "SECONDARY SUPPORT" does not give way. If it does, gold will drop to $1700 - $1690 and possible as low as $1680 before temporarily stabilizing.

There is some concern that the slower growth in China (they are still humming along at over 7% but well off the previous pace) will curtail some physical gold demand from that quarter. Also, from time to time it appears the woes in Euroland continue to make traders nervous about piling on the risk trades any further.

The larger trend continues against a backdrop of easy money policies meaning low interest rates and Quantitative Easing/Bond Buying programs and some government stimulus measures over in China. That does not look to change for the foreseeable future. This will keep the primary trend in gold intact.