Gold is finding support in our 2nd tier uptrend line as the precious metal avoided an encounter with 7/29 lows. We notice a similar development with the EUR/USD and its own 7/29 lows, telling us the EUR/USD may be a stronger immediate-term read on gold. The Greenback is balancing across the board following its swift appreciation, giving gold a boost due to its negative correlation with the Dollar.

Remember that gold is following the Greenback more closely than U. S. equities these days, though the movement of the S&P does have a moderate influence on the direction of the precious metal. Therefore, present weakness in the S&P futures could limit upward mobility in gold as the Pound and Euro appreciate.

Consolidation could be the theme in markets over the next session or two as investors take a breath and digest the pullback in U. S. equities. Since this week’s economic data out of the EU and Britain have been positive, investors may be second-guessing their instinct to follow the negative tide of news surfacing from the U. S. However, near-term pressure does remain to the downside since we’ve noticed increasing sell-side activity along with a collapse of the psychological $950/oz level. Gold has something to prove to the upside, beginning with our 1st tier downtrend and 3rd tier uptrend lines along with 7/29 highs and the psychological $950/oz zone. As for the downside, the precious metal has technical cushions in our 2nd tier uptrend line, Monday lows and 7/29 lows.

Present Price: $936.85/oz

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