Gold has only dropped because Japan is intervening in the market and selling JPY and buying mainly USD and some of the major currencies. This is why the AUD is falling vs USD but not as much as POG. Once the JPY sell down is complete money will start to flow into gold from USD for those that have long term positions and buy on dips.
Though there is a risk of margin calls being triggered on this drop which may force some to unwind their positions.
It will be interesting to watch the dynamics on this one as I suspect Japan will be doing more JPY intervening in the future. Unfortunately the JPY carry-trade is being unwound in favour of the USD carry-trade which means JPY will continue to strengthen until this is swap over is complete.
