In the bigger picture, this is a five wave impulse unfolding from the May 2 intraday high of 1370.58. Wave 4 up ended with Wednesday's 1208 high, and wave 5 down is developing. Wave 1 lasted a month and a half, so this will take several days, at least, and possibly a few weeks to unfold.
I still like my 1000 to 1050 estimate for the end of this phase of the decline, and an intermediate bottom, with lots more room on the downside to follow.
Meanwhile, gold has gone to an insane level. The rise from 2000 (Y2K) to almost 2000 ($$$) has been exponential - aka a bubble. This is a horribly mistaken substitute for a flight to safety. Anyone who bought gold in the last three or four years will be wailing and gnashing their teeth, unless they sell some time soon to a greater fool. The timing is unknowable, as is the ultimate high. But bubbles always burst, and this one will not be an exception. It might take years to play out, but the initial drop will probably be a terrifying panic. You can expect gold to eventually end up back at the $250 to $400 level.
This will occur in the context of a strengthening dollar and collapsing Euro. The risk of inflation at this point is essentially nil. The real risk is deflation, and I am very, very afraid.
For an almost, but not quite, completely different assessment, refer to Dr. Doom.