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There's nothing to support gold

The dollar is on its best winning streak since it ditched the Gold Standard during the Nixon administration. But that's hardly good news for gold bugs, who have seen gold give back all of this year's gains.

The U.S. dollar index has been on a tear since the middle of the summer. It has been up each of the past 10 weeks, breaking the nine-week streak last seen in 1997. And over that time period, gold has fallen 8.4 percent, despite a number of geopolitical factors that would normally compel traders to buy bullion hand over fist.

A strong dollar is terrible for gold," said Gina Sanchez, founder of Chantico Global. "But it's more than just the dollar. Gold demand has also been quite weak."

(Read: Looking to profit from dollar strength? Buy these)

Sanchez cites The World Gold Council's statistics that show a 30 percent decline in gold jewelry demand worldwide for the second quarter of 2014 compared with same time last year. The WGC also showed a 56 percent drop in gold bars and coins demanded in Q2 compared with last year.

Tons Demanded

2013 Q2

2014 Q2

% change

Jewelry

726.7

509.6

-30%

Technology

103.8

101.0

-3%

Bars and coins

627.9

275.3

-56%

ETFs & similar products

-402.2

-39.9

-

Central bank purchases

92.1

117.8

28%

Total gold demand

1,148.3

963.8

-16%

A stronger dollar compared with other currencies, rising interest rates and a feeble economic recovery are all hurting gold prices, said Sanchez. "There's really nothing to support gold," she added. "I see gold continuing to go down."

The technicals are in alignment with the fundamentals, according to Richard Ross, global technical strategist at Auerbach Grayson. "I think gold goes lower here in the short term and could go significantly lower in the intermediate term," he said.

Ross' short-term chart shows that the precious metal is looking to retest support at a double bottom at $1,180 per ounce, a level tested twice last year. Meanwhile, he sees a bit of resistance at $1,240 and more strongly so at $1,275. "Absent a break back above $1,275, I must remain bearish of gold here in the short term," he said.u

(See: CNBC's Currencies coverage)

But a longer-term chart shows gold going from bad to worse, Ross said. "This really hammers home the importance of that $1,180 level. On a break below $1,180, that would take us out of this descending triangle which has been forming for two years now. That's a very bearish continuation pattern to the downside."

From there, gold could fall to $1,000 per ounce, Ross said. His long-term chart shows that as having been the neckline resistance of a head and shoulders pattern in 2008-2009. From there, gold launched itself to record highs of $1,909 in 2011.

"I see a complete roundtrip," predicted Ross. "Ultimately, we're going back to $1,000. The stronger dollar, the higher rates … that's going to help us get there."

To see the full discussion on gold, with Sanchez on the fundamentals and Ross on the technicals, watch the above video.

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