What’s Up With Gold?

Or perhaps better stated "What's down with gold?" Last week I wrote a post on the gold miners wherein I laid out many reasons to question the widespread bullish "with limited downside risk" view on the miners. Since then $GDX and $GDXJ have been hit hard while gold has tumbled nearly $200/ounce and fallen below its 200-day SMA for first time since early 2009. The price behavior of gold has been far from compelling for a bullish view, however, market sentiment has also turned highly bearish with the consensus now being that gold will go lower (into the 1400's) before year end.

So what is the max-pain scenario for gold at this point? I would say a plunge below the recent support level at $1567 to test or either slightly break the September low of $1535 before a violent reversal higher back above 1600.

I'm not big on trendlines in markets as violent as the current ones, instead I will be more focused on the lower Bollinger band on the weekly and the 50-week SMA, Needless to say Friday's closing price will be of huge importance.