After a $211 rally from the New Year’s Eve low of $1181.40 gold may finally be running out of steam. Here are 3 reasons why a pullback in gold is imminent:

1. The latest COT data shows much of the recent rally has been fueled by short covering among speculators:

Gold_COT_3.11.2014

This is more than a 50,000 contract reduction in speculative short positions since December 31st, 2013 and the smallest speculative short interest in gold futures since January 2013 (right before gold entered a steep decline):

GOLD_cot_12.31.2013

2. The gold miners just completed a bearish candlestick pattern as they flirt with a false breakout from the multi-month cup & handle pattern:

GDX_Daily_3.17.2014

3. ~$1400 is major resistance that is unlikely to be breached with ease:

Gold_Daily_3.17.2014

Today’s bearish outside reversal in gold signals that the pullback may have already begun:

GC_Bearish_Reversal

However, the previous resistance zone $1340-$1350 should offer ample support if price pulls back further over the coming days.