Gold failed to participate in the S&P’s surge yesterday, opting to sink towards our 2nd tier uptrend line on climbing volume. Thursday’s movement in gold shows us the precious metal is more positively correlated with the Dollar than U. S. equities, aiding investors in further correlative deviations between the greenback and equities.

Looking a little deeper into gold’s positive correlation with the Dollar, we believe a stronger Dollar could discourage foreign nations from diversifying their reserves from the greenback, placing downward pressure the precious metal. Despite yesterday’s pullback, gold managed to balance on our 2nd tier uptrend line and above 7/22 lows. The precious metal has proceeded to recover above the psychological $950/oz level, and is heading towards our 2nd tier downtrend line as we type. We anticipate gold could finish the week with further consolidation as immediate and near-term downward pressures are heavy.

Gold will likely wait around $950/oz as the precious metal looks to see if U. S. equities can continue their ascent next week and drag the EUR/USD and GBP/USD along in the process. Near-term topside barriers are our 2nd tier downtrend and 3rd tier downtrend lines along with $950/oz and Thursday highs.

Present Price: $952.62/oz

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