Gold prices saw a sharp decline Monday to begin the holiday shortened trading week. Gold prices sank over $20 per ounce and are currently floating around past support in the $1173 area.

Gold prices had been trending higher in recent weeks. The gold bulls have not been able to put together a very convincing rally, however, and gold is now likely sinking as lack of additional upside has caused some longs to throw in the towel. This week will likely be very light from a volume standpoint, however, and the downside seen in gold today could be partially attributed to lower trading volumes. That being said, gold may also be seeing some year-end position squaring as many traders close the book on 2014.

Oil prices were lower today and remain a thorn in gold's side. The sell off in oil does not appear to be over yet, and there seems to be more and more discussion of oil prices hitting the $40 per barrel mark. Lower oil will likely remain a large concern for investors heading into the new year. While stocks have now seemingly shrugged off the falling price of crude, one has to wonder if they will continue their recent winning ways to begin 2015.

Tomorrow's trading day may be the most active of the week as investors prepare for the Christmas Holiday. markets will see the latest data on Q3 GDP as well as durable goods orders, consumer sentiment and new home sales. Wednesday will bring the latest on weekly jobless claims and oil inventory. Some markets will be closing early Wednesday and all markets will be closed on Thursday for Christmas.

Gold investors will be watching the same themes to begin the new year. Stocks, oil prices, the dollar and the Russian ruble will all likely be providing gold with trading cues. In addition, the Fed may also play a large role in gold's direction as the central bank gets ready to begin hiking interest rates sometime this year. Some believe the first hike will come in the second Fed meeting of the year. While the notion of higher rates may be seen as bearish for gold and precious metals, the idea that rates are likely to stay low for some time still may actually give gold a boost.

The November lows around the $1132 area are key support for gold. A break below this level would likely set the stage for a test of the $1000 per ounce level in the coming weeks. The recent swing high in the $1240 area remains near term upside resistance.