Gold finally found bottom yesterday, gaining on the weakness in U. S. equities. However, the rise is insignificant thus far compared to the fundamental losses experienced over the last few sessions.

The backbone of the uptrend was broken with the passing of our 1st tier downtrend line and the highly psychological $900/oz. The fundamentally weak position of gold is a positive sign for equities unless we are heading for all-around deflation as we experienced during the height of the economic crisis.

That being said, we have little reason to be positive on gold trend wise. However, we wouldn't be surprised to see some near-term gains in the precious metal due to oversold conditions and the current weakness in the S&P futures.

The only possibility of gold surging back into its uptrend would be a complete collapse in U. S. equities with full participation in the positive correlation between the investment vehicles.

Fundamentally we hold our resistances of $881.57/oz, $884.10/oz, $887.21/oz, $890.64/oz, and $894.46/oz. To the downside, we maintain our supports of $877.02/oz, $873.74/oz, $870.47/oz, $866.11, and $862.30/oz. Gold is currently trading at $878.45/oz.

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