Gold peaked at just above $1900/oz back in 2011.  Since then it has been working lower in fits and spurts and is now more than 40% off those peak prices.

Looking at a weekly continuous chart of gold futures, it’s easy to see how gold has repeatedly declined into zones of support (as defined by the volume profile) and found buyers, however never enough to turn the trend of prices back to the upside.

The high-volume areas (HVA’s) that were created on the rally during the years 2010 and 2011 have accurately defined the levels of support where we’ve seen buyers step in over the last 2 years.

Currently, the support at 1080 is being tested.  If this level can garner buying interest such that we see gold prices rally initially back above 1175 – 1210 (initial resistance) and then back above resistance at 1279 – 1326, then the trend would be reversed from down to up.

A breach of 1080 however, would target further decline into the next lower support zone that begins at 953 and extends down to 863.  If this occurs, that will mean that gold will have dropped 50% from its 2011 high.  That’s not a prediction, that’s just the math.

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