Gold is on the cusp of a 'major breakdown': Technician

Gold on cusp of 'major breakdown': Technician
Gold on cusp of 'major breakdown': Technician   

Gold bugs simply can't catch a break.

After starting 2015 with a bang, bullion made a new year-to-date low this week as Fed Chair Janet Yellen reiterated plans to raise interest rates later this year. The precious metal is now more than 12 percent from its January high, and according to one technical analyst, it could be on the "cusp of a major breakdown."

"I think we need to be prepared for what the biggest casualty of a rate hike could be, and that's gold," Todd Gordon said Thursday on CNBC's "Trading Nation."

By Gordon's chart work, gold has broken through a key trendline that's been in place since 2001.

"If you look at the long-term uptrend from the low in 2000, you notice that it's broken and we are starting to move below support toward that 200-week moving average which comes in at $805," said Gordon.

With that crucial level now having been violated, Gordon predicts that gold should find a floor around its pre-crisis highs, which also corresponds to its high back in the early 1980s.

"If you go all the way back to the 1980 high of $873 [an ounce] and project it all the way to 2015, I think that's going to be a key level on the pullback," said Gordon, founder of TradingAnalysis.com. "That was a major consolidation level during the credit crisis, and I think it serves as a natural target when the Fed hikes rates."

If gold were to finish 2015 in the red, it would mark the third straight year of losses. That would be the longest yearly losing streak for gold since 2000.

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