Gold has backed away from $970/oz after mixed/negative economic data releases from the U. S. The data points resulted in a slight appreciation of the greenback as well, showing investors are comfortable with cashing in some profits. Gold is trading back around June 10th highs as the S&P futures duck back beneath their highly psychological 1000 level. Since economic data is done for the day, we wouldn’t be surprised to see the precious metal continue its consolidation as the S&P deals with
1000.

The bulls have been on a huge run lately, so it’s only healthy that the markets experience some profit taking and consolidation. Regardless, momentum is clearly in favor of the uptrend. All of gold’s correlations are confirming the precious metal’s breakout. The GBP/USD and EUR/USD both broke out to new 2009 highs this week, a positive development for gold considering its negative correlation with the Dollar. However, the S&P’s battle with 1000 could prove to be long-winded, taking some of the air out of gold’s sails.

Meanwhile, gold is trading back above August 8th highs and volume is decreasing to the downside. However, if the precious metal can’t hold our 2nd tier downtrend line, it may defect towards our 1st tier downtrend line and our bottom-end support. As for the topside, gold’s immediate barriers are our 3rd tier downtrend line and Tuesday’s highs. If the precious metal can get above these two obstacles, gold could accelerate towards $980/oz.

Present Price: $963.15/oz

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