Gold has continued its trend of inflicting maximum pain upon market participants who attempt to jump aboard seemingly nascent trends in the precious metal. Just as gold futures speculators reached their largest net long position in more than a year, gold suffered a false breakout above resistance near $1330:

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Gold_CoTSource: Barchart.com

False breakouts and false breakdowns have been the normal course of affairs for gold in 2014. In fact, on the weekly time frame gold remains in a rangebound oscillation which can be interpreted as a bearish flag pattern (a breakout above $1400 is required to nullify this interpretation).

After the $50+ plunge from Friday's highs the question becomes "where to next?"

Gold_Daily_7.17.2014

While $1300 is a nice round number that has been a rough center of gravity for gold in recent months, the real support comes into play in the $1275-$1290 area. This is an area which has supported price on numerous occasions since March. Moreover, the confluence of the lower 2-standard deviation Bollinger Band and the 50/200 day SMAs adds another layer of importance to the $1290 level.

Given that we are now in the back half of July and quickly approaching the strongest period of the year for gold historically, any additional dips in the gold price are likely to be short lived as buyers use the $1290 support level to load up ahead of the strong August/September seasonal period.

Gold_Seasonality(August was also a strong month for gold in 2012 and 2013)

See also: Gold and the Rule of Maximum Pain