Gold is buckling under the pressure of a rapidly depreciating Greenback. Investors are snapping up the Dollar after the U. S. released encouraging economic data in conjunction with disappointing data from both Britain and the EU.

Meanwhile, the S&P futures are setting new 2009 highs while trying to separate themselves from 1000. Gold’s negative movement is supporting our speculative observation that the S&P’s correlation with the Dollar may be shifting (reference FX commentary). While gold is inclined to follow the EUR/USD and Cable lower, the rise in crude and U. S. equities is helping mitigate losses in the precious metal today. Additionally, gold should continue to experience considerable support around the psychological $950/oz level.

If gold’s 1st tier uptrend line doesn’t hold, the precious metal has our 2nd and 3rd tier uptrend lines to fall back on. Therefore, the precious metal has some reliable cushions in place. Meanwhile, investors should monitor the behavior of the Dollar and its interaction with U. S. equities. Since gold has been more closely tied to the Greenback, any further appreciation in the Dollar could apply added downward pressure on the precious metal. As for the upside, gold now has to deal with all three of our downtrend lines and previous August highs. Therefore, the precious metal certainly has its immediate-term work cut out for it should it want to reverse course.

Present Price: $957.40/oz

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