Gold is capped under its short-term bearish channel ceiling (see intraday chart), beneath $1680 (12th April high) and the 200-day average (at $1700).

It still worth remembering the dramatic $103 one-day drop continues to offer psychological pressure for investors and traders.

The recent failure to break above the bearish channel ceiling has now reactivated downside pressure back into 1623 (23rd April low), then $1600 (psychological) and $1567, thereby offering further setbacks into $1522 (29th Dec swing low).

A sustained confirmation beneath here would resume risk for a much larger decline that we have been anticipating. Keep in mind that our cycle analysis continues to highlight downside targets into $1460 and $1300.

This would likely trigger a temporary, but dramatic setback that would ultimately offer a unique tactical buying opportunity into the coming summer/autumn months of 2012.

Only a sustained confirmation above $1716 and $1810 will put the bearish scenario on hold and offer further extended recovery higher on gold.

Daily Technical Report