Award-winning technical analyst: Gold will drop below $900 and further

According to one award-winning technical analyst, with today's high volatility in the marketplace, it is way more important to look at gold’s price action and what the charts are saying than any potential fundamental factors.

Clive Lambert, technical analyst at Futurestechs and winner of the U.K. Technical Analyst award for of the best commodity, energy research and strategy for 2015, noted that the price action on August 24 is possibly the most vivid example of how the gold market is not following any fundamental trends, in particular as a shelter asset.

On Aug 24, the U.S. equities were down 1,000 points even before the open. The yellow metal should have ended the day at least up $25 dollar, but it ended in negative territory instead.

"I was getting bullish on gold for the first time in a long time, up until that point," Lambert said, adding that sometimes what really defines the price action is what markets do not do.

Gold is still in a lingering downtrend, and, as Lambert suggests, investors should either go with it or remain on the sidelines. He is expecting gold will finally retest support at $1,090 an ounce and, depending on the selling pressure in the marketplace, prices could be pressed further below $900 an ounce.

The $1,090 is the big level to watch in the gold market, as it represents a 50% retracement from the trough in 2001 to the peak touched in 2011.

Since the market could not push through $1,286 - representing a long-term retracement level at 38.2% - in the rally from the July lows, Lambert explained that it is more likely price will continue to dip to $893, the 61.8% long-term retracement level.

Together with the long-term retracement levels, the analyst is also monitoring gold’s 155-day moving average, which comes in at $1,173 an ounce. The gold market needs to break at least that level and move above $1,175 before he starts becoming bullish again, he said.

Although Lambert remains strongly bearish on gold, his outlook on silver is getting more positive. However, prices would have to rise above $15 an ounce before he starts buying, Lambert said.

“We just can’t bet bullish until we hit that level. So for now you remain bearish on silver or you sit on the sidelines and wait,” he said.