Gold is consolidating just above our 2nd and 3rd uptrend lines while encouragingly experiencing a little volume to the upside yesterday.  The positive volume is encouraging since we've seen more interest to the downside lately.

The present consolidation of gold reflects the S&P's hesitation at its highly psychological 900 level.  Since gold is positively correlation with U.S. equities now, a fundamental breakdown in one could coincide with or be followed by a similar pullback in the other.

Therefore, investors should be watching gold's 2nd and 3rd tier uptrend lines closely.  For if these trend lines down hold, we could witness another near-term pullback towards our 1st tier downtrend line and the $907/oz area.

The near-term momentum still sides with the downside since a majority of the volume over the past couple weeks has come from the bears.  As for the upside, gold has to deal with our 1st tier downtrend line and the psychological $950/oz level.  The precious metal still has reliable defenses intact to the downside, protecting the precious metal's medium-term uptrend line. 

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