A few weeks ago, it broke below 1190 in what could have produced a sharp move down.
It was retained for 2 reasons:
1 - there is support line coming from the oscillations that started in Sep12.
2 - The Swiss referendum had created some expaction around CB buying.
(2) will be cleared today and it seems the proposal will be rejected (no SNB buying).
The price could follow its course.
If 1120 is broken, it could dive hard to 970 where there should a significant rebound before maybe reaching 880/820 .
I am not sure it will go down (hence invalidation 1220), but if it goes to 900/820 it is probably a multi year buy.
However: gold is not a necessary item like sugar or oil.
The yearly production is only 1% of the "float" I think.
And.... Extreme is almost a business plan in the market... You reasoning is very rational,.. I think the market often goes beyond "logical" boundaries to take out some intellectually correct stops.
It may last only 6 months below 1100, which lately good be seen as an excess in big picture.