Today’s early rally in gold is selling off as the upward movement failed to attract substantial volume.  Meanwhile, the precious metal is drifting below the highly psychological $900/oz mark and 4/29 highs.  Gold remains lodged in our downtrend dating back to February with the S&P futures approaching their own highly psychological 900 level.  What should stick out are the counterbalancing momentums as the negatively correlated investment vehicles battle with their respective critical levels. 

With the upward momentum seemingly on the side of U.S. equities, it is difficult to have a positive outlook on the precious metal right now.  To the downside, the next stop for gold appears to be our 2nd tier uptrend line and our $884.70/oz support.  If the precious metal can manage to climb back above today’s high, then the next meaningful barrier would likely be our $897.30/oz resistance.

Today’s activity should come down to the Pending Home Sales data release from the U.S.  Though U.S. equities may consolidate until investors get a better idea of the stress test results, any victory over the 900 level by the S&P futures could result in a corresponding selloff in gold. Even though we maintain our bearish outlook on gold trend-wise, we wouldn’t be surprised to see a near-term pop in the precious metal should U.S. equities hesitate at 900.      

Fundamentally we find resistances of $894.04/oz, $897.30/oz, $899.72/oz, $903.59/oz, and $906.42/oz.  To the downside, we see supports of $889.87/oz, $887.31/oz, $884.70/oz, $882.53/oz, and $880.03/oz. Gold is currently trading at $890.65/oz.

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