Before you look at the client sentiment index at the bottom of this post, are you a buyer or seller of gold? Which way do you think your fellow traders are positioned - long or short?

It's an important question. Gold has once again described a triangle. In working towards the apex (the pointy end of the triangle for those who are working through a New Year's hangover), daily ranges are increasing. This increase in the ATR may be indicating a break to come:

chart of the gold price

The MACD continues to indicate selling momentum - although the red and black lines moving closer together illustrate that this momentum has weakened recently. Nevertheless, it's an interesting development where gold is bumping along the bottom edge of a triangle. If this selling pressure pushed through the triangle, falling below $1180, the break could see a test of the October lows around $1131.

However, it's clear from CMC's Client Sentiment Indicator that on balance traders are expecting a bounce off the triangle's lower support line:

client sentiment for gold

It's very possible all those long traders are correct. However, if they're not, and gold drops through the $1170-80 level, there may be a scramble to sell as bulls cut their positions. Clearly, this has the potential to increase downward moves.