Gold has failed to breakdown significantly from the tight coil pattern it created over a 2-month period. Failed breakdowns often mark key reversal points in markets, especially after moves that take a while to play out. In a downtrend, the duration of the move produces the angst and disgust that causes most of the selling. Then the final break of support creates the final flush out of the weak holders who didn't sell out earlier in the move.
When there's not enough selling pressure to continue the breakdown, the market often reverses higher in a fast and powerful manner. The selling pressure isn't there anymore and new buyers push the market rapidly higher. The market basically gets caught looking in the rear view mirror, expecting more of the same thing to happen forever. Meanwhile, quickly and with force things change when many aren't paying attention and a new trend develops.
After the coil in gold broke down in late May I noticed that sentiment on gold turned very bearish as if everyone was throwing in the towel. I even heard a podcast that I've never witnessed bearish on gold, say it wasn't a good time to buy gold. But as of yet, the breakdown out of this coil has not produced significant follow through selling. Check out the chart of gold below to see exactly how this has unfolded.
Clearly $1,280 is an important level going forward for gold since it represents resistance from the coil, and is also where the 50-day moving average sits currently. If gold can surprise the bears to the upside and complete the failed breakdown things could get interesting.