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CITI WARNS: Gold is setting up for a drop

The charts don't look so good.

Gold is setting up for a drop, according to the CitiFX Technicals team led by Tom Fitzpatrick. The group warns a double top pattern has been confirmed, and that the precious metal should fall more than 6% from here.

"The key level at $1,214, which was the double top neckline, has given way on a weekly close basis," according to the team. "The setup points towards a move to $1,133."

A drop to 1,133 would push the precious metal into negative territory for 2017. Citi says gold should find support in near $1,121.

Gold has rallied about 5.5% so far in 2017, even as the Federal Reserve has continued on its path to normalize interest rates. The yellow metal topped out just shy of the $1,300 level in both April and June, right around the time of the Fed's last two rate hikes.

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Potentially limiting the precious metal has been the rise of cryptocurrencies. According toTom Lee

The two cryptocurrencies have respectively gained 172% and 3,200% year-to-date as of Friday. Currently, bitcoin has an aggregate value of $42 billion, but Lee believes if that grows to $500 billion central banks could become buyers.

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