Gold bears want to see a close below $1,418 Monday.
Gold sold off on Friday, reaching the lowest level since April 24 ahead of May options expiration. All week, gold was hitting a wall just below $1,480, and after reaching stops below $1,455, it picked up momentum to the downside and broke the major $1,437.50 support level.
The low on Friday was $1,418.50; however, the market found support against a trend line and was able to rally into the close. Gold reached $1,436.60 upon the floor close, and surprisingly reached the major $1,447 pivot level upon the electronic close, putting shorts on edge as the market failed to follow through.
However, the dollar initially traded stronger overnight, following comments from Bank of Italy Gov. Ignazio Visco that the European Central Bank is "technically prepared" to push its deposit rate below zero.
(Read More: ECB's Visco: Deposit Rates Could Go Below Zero)
This comes alongside comments from the Group of Seven meeting that indicate that central bankers will tolerate the ongoing weakening of the yen.
(Read More: G-7 Tackles Bank Reform, Gives Japan the Green Light)
These two events put commodities priced in dollars under pressure Monday morning, and had a hand in the early downside momentum that pushed gold down $20 from the session's high of $1,448.
In the intermediate term, we can now expect gold to trade in a new range between $1,402 and $1,447.20. Look for upside momentum on a close back above $1,437.50 to $1,438.80, and further weakness on a close below $1,424.