$1200 is key support and so far price is more or less holding at this level. The daily chart above displays a well-defined descending triangle formation, which includes a longer-term declining trend line. I would also point out in the lower inset of the chart that commercial hedgers (typically smarter money) are the least bearish they've been since the late-June low, and frankly it's their least bearish bias since pre-2009.
Taking a longer-term view, the following chart shows gold and the Gold Bugs Index (HUI) since 2005:
The HUI is comprised of gold miner equities. As I've discussed here several times in the past concerning crude oil and energy stocks, it's been my experience that equities tend to lead their associated commodity(s) and this tendency likewise holds true for gold and gold mining stocks. Note that whereas gold bullion has returned to a level that approximates the highs in 2009-2010, the HUI has retreated to a level that approximates prior lows set in 2008 and 2005. Clearly as bad as gold bullion has performed since its breakdown earlier this year, it has fared relatively much better than gold stocks. However, if in fact gold equities tend to lead gold bullion, the chart above does not bode well for the precious metal.
For the HUI, I would also point out the massive bearish complex head-and-shoulders formation carved out since late 2009, with a breach in the neckline occurring earlier this year. Note the breakdown in the neckline happened well before the breakdown in gold bullion in April. Also note the parabolic rise in gold bullion, the increasingly arching-upward green trend line, with the first breakdown at the pinnacle in 3Q2011 followed by three attempts to make a new high only to fail (horizontal green line). All during this time in 2011 when gold bullion was going parabolic and topping, gold equities (HUI) were consolidating within a $500-$600 range, ultimately breaking down in 1Q2012 when gold bullion was still holding up quite well.
I wanted to show gold vs. the HUI from 1998-2005, when both were making new lows at the time.
Again, as shown via the blue lines, gold equities tend to lead the metal. Note the HUI peaked well ahead of gold in 1999, bottomed before gold in 2000, led higher in 2003 and peaked before gold in 2004.
What does all of this mean for gold today? As I already mentioned, longer-term, the fact that HUI has reached lows far below gold in relative terms would not appear to be a bullish sign for gold. However, shorter-term the picture looks a bit more promising.
The weekly chart above shows the HUI breaking down in 1Q2012, about a year ahead of the break down in gold (blue lines). Note also that the MACD for HUI was trending downward as the HUI price continued to make minor new highs in 2011 -- a bearish divergence. Interestingly, with the decline in HUI during this past June to date, the MACD has risen creating a bullish divergence. That said it wouldn't be surprising to see gold equities rally from their current very oversold level and in so doing provide an underlying bullish indication for gold bullion.
I would reiterate that although gold could very well hang tough at the current $1200 support level, esp. given the developing bullish MACD divergence in the HUI, the more important point is the longer-term chart for gold remains ugly and there have been better places to play for many months now. Until further notice, gold has been and remains a tactical trading vehicle.