The precious metals sector has declined sharply in recent weeks with no pause or intermittent breaks in the decline.

Including Friday, gold is down eight consecutive days and 16 of the past 18 days. The gold miners (GDX) have lost roughly 20% in the past seven days. The sector is extremely oversold in the short term and a reflex rally could begin in the next few days. While gold and gold bugs should get temporary relief, the larger picture remains quite bearish.

The daily candle charts of gold and GDX are included in the image below. (Note that gold was not updated Friday). Gold which traded as low as $1084/oz Friday, had support in the $1080/oz to $1100/oz zone. Meanwhile, GDX, after gapping lower Friday, found support around $13.50. GDX has good support in the $13.00 to $13.50 area. Gold and gold stocks are very oversold and have reached levels at which a bounce could begin.   

While gold and gold shares are likely to rally in the days ahead, the overall prognosis remains decidedly bearish. Consider the monthly candle chart for gold. Monthly charts carry more weight than weekly charts and much more weight than daily charts. Gold appears to be breaking down from the bearish flag pattern formed in recent months.