Gold may be heading below $4,000 GOLD VOLATILITY INDEXCBOE_DLY:GVZcmcmarketsOil price volatility has led to lower gold prices amid rising interest rates and a stronger dollar, tightening financial conditions. This has left gold trading within a volatile range since mid-March, after plunging from roughly $5,450 to $4,100. Now, we have seen gold recover some of its recent declines, advancing back towards $4,700-$4,800. However, so far, this move appears to be little more than a 50% retracement of the decline that began on 2 March. In addition, gold may now have formed a bear flag pattern and, more importantly, may have broken it after falling below the uptrend that began on 23 March. If this interpretation is correct, it would suggest that gold prices are could fall materially in the coming days and weeks. The pattern itself suggests that gold prices may fall below $4,000 if it plays out to completion. The trend in the relative strength index also suggests that gold may be heading lower, too. The RSI peaked in late January and has been steadily trending lower, an important indication that suggests the overall trend in gold has changed from bullish to bearish. It is also worth noting that the CBOE Gold Volatility Index has declined to around 30.5. This remains an important indicator to monitor. If implied volatility in gold continues to fall, it would help confirm any bearish move in the spot gold price. Written by Michael J. Kramer, founder of Mott Capital Management. Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction, or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination