Gold needs a big day on Monday
If gold doesn't close above $1200 on Monday, it's in trouble.
It's currently hovering around the $1175 level after a 10% drop over the past month. Just below is the 61.8% retracement of the rally over the past year.
If that support gives way, there is nothing protecting gold from falling back down to $1100 and below.
The one bullet the bulls have left is the Italian referendum on Sunday. If Renzi loses and resigns it might kick of a round of risk aversion that lends a bid to gold.
To me, it needs to happen quickly because the technical picture is dark at the moment. At the very least, a $25 rally on Monday and a close above $1200 would start to get the bulls engaged. From there, a continuation to $1250 is possible.
But ever for a bull, I think the better bet is to wait for a further dip. If gold drops down to $1100/1050, there is much more support nearby and the $1000 will be tough to crack. In addition, the January/February period is seasonally strong for gold and that proved to be true (in a big way) last year.
