Probably a more immediate threat to sentiment is the continued surge in the CTFC COT data. Dan Norcini remarks on JSMineset today:

"My analysis of the current report shows these commercials with the largest outright short position that they have ever held with the specs holding the largest outright long position that is on record. What this means is that the bullion banks will be looking to scare the longs out in order to induce further liquidation and cause a setback in price."

Another JSMineset contributor supplies some perspective:

As (gold) began to accelerate from $439 on 8/23/05 to $692 on 5/16/06, commercial traders were heavily short. Their net short position as a percentage of open interest was -50.6% on 8/23/05. The lowest reading since 2001. Like August 2005, the time is right for…advance. When the time is right, price will follow. As of 9/15/09, commercial trader net short position as % of OI -49.2%. The most negative readings since 8/23/05.

Those advocating caution towards gold on the basis of commercial trader concentration on the short side, referred to as overloaded trade, ignore that gold’s strong advance from August 2005 to May 2006 developed from a similar "concentrated" position.

See http://jsmineset.com/2009/09/18/cot-gold-comparison/