On Wednesday night, gold found itself consolidating at major $1,594.5 to $1,596.5 support late in the day, and was able to trade slightly higher overnight, reaching a high of $1,602 before trading nearly $20 lower to $1,585.3. As the market struggled to hold above $1,600, and just below major resistance at $1,605, selling came in and the market found the path of least resistance was to the downside.
So far we have seen support against the $1,585 to $1,588 Tuesday's low. The market is searching for a bottom, but with price action more than $30 from Tuesday's quick high, a failure to close at a minimum above $1,580 will be very bearish. Look for a move back into the $1,594.5 to $1,596.5 area to negate this early weakness.
Bottom line: Bulls badly need yearly lows to hold.