Has Gold Lost Its Shine For Good?

280613_PC_leongBack in April, I said gold was looking bad on the chart and that as long as the stock market continued to advance higher, the prospects for gold were dim. (Read “Is Gold’s Near-Death Crisis Over-Exaggerated? Concerns of a Market Meltdown May Not Be.”)

Fast-forward two months, and while stocks have been in a minor correction, there continues to be distaste for holding gold.

The reality is that inflation is benign and will likely stay that way for a few years. The world’s central banks continue to drive easy money into the system and investors are looking elsewhere to make money, ignoring the precious metals, especially gold, traditionally a safe-haven investment.

The problem now is that there’s really no need for a safe haven at this juncture.

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Gold is down 36% from its peak of $1,920 in September 2011, and it’s not looking good.

I even feel that gold is vulnerable to $1,200 on the chart. Take a look at the long-term chart of spot gold featured below. The lower support appeared to be in place until the slide on Wednesday to the $1,224 level. The threat now is that gold could continue to break down and make a move toward $1,200. If this happens, we could actually see a move down to the $1,100 level, based on my technical analysis.