Gold took a serious tumble today, a day filled with news releases regarding Europe's LTRO (long-term refinancing operations), and commentaries from Bank of England Governor Sir Mervyn King and Fed Chairman Ben Bernanke.

There were other forces at work as well.  The European Central Bank sold 7.6 tons of gold last week, very likely as part of a fund-raising move to meet its share of the Greek bail-out contributions.  Many hedge funds sold off as well, in order to cover their losses in equity markets.

There is also a rumor that the Chicago Mercantile Exchange will again raise its margin requirements for the precious metal, as they did back in August.  Larger margins, of course, mean holders of gold contracts must either make additional deposits on their accounts, or sell off some positions.

So does all this pressure mean our rally is over?

Not necessarily.  While today's drop was indeed dramatic, gold actually managed to find support above the weekly 21 exponential moving average.  Also, to some extent, this drop was to be expected from a technical perspective, as 1787.79 is a prior high from October.  There were also divergences visible on both the daily and 4-hour charts.

Where do we go from here?  That depends on a large part whether we can find support in the 1671.22 - 1690.74 zone in the days ahead.  If so, look for gold to rally back up to 1763.11, possibly 1787.79 once again (our long-term targets for gold are at 1828.06 and 1855.00, possibly as high as 1881.39, but that's only IF we can break 1787.79 and find some support there, first).

If gold fails to find support at 1671.22, then the next potential downside targets include 1647.10 and 1614.44

Personally, over the long-term, I remain confident that as governments continue print their way out of this financial crisis, gold will continue to become increasingly more attractive to investors.

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