Gold has added onto yesterday’s gains, bursting through July 7th highs as the greenback depreciates across the board.  Upbeat earnings reports from the likes of Intel and Goldman have resulted in higher investor confidence.  Investors are returning to equities and crude while exiting Treasuries.  The result is a strong performance in gold as the precious metal makes full use of its positive correlations. 

Additionally, we notice China’s reserves topped $2 Trillion.  Recalling the report earlier this year showing China has been adding to its stock of bullion over the past few years, we wouldn’t be surprised if China is diversifying some of its new reserves into gold in an effort to decrease its dependency on the greenback.  However, as with the EUR/USD and Cable, we haven’t witnessed confirming volume on the buy-side yet in gold. 

Therefore, investors are showing hesitation in making a commitment to the uptrend.  Gold now faces July 1st highs, the psychological $950/oz level, and our fresh 3rd and 4th tier downtrend lines.  Hence, although the upwards movements in gold over the past couple sessions are certainly encouraging, the bulls shouldn’t get too confident just yet.  As for the downside, gold has quite a few cushions to fall back on now, including several solid June support levels and our 2nd tier uptrend line. 

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