Gold continued its oversold rise yesterday while U. S. equities logged heavy losses. However, the precious metal is turning south again as the S&P futures find solid support in their key 800 psychological level. Therefore, the negative correlation between the two appears to be active once again.

However, the relation between the two has been scattered and unreliable as of late. On one hand, Gold could be suggesting that the equity rally is legitimate and will reactivate shortly. On the other hand, Gold could be participating in the deflationary pressures we witnessed during the height of the economic crisis. It is difficult to be certain right now.

However, the leg of the uptrend has clearly been broken, and we will have to see what this says about equities. Our 1st tier uptrend line and the psychological $900/oz level have been washed away. Even though gold may try to retest $900/oz, the message has been sent.

Fundamentally we see resistances of $884.10/oz, $887.21/oz, $890.64/oz, $894.46/oz, and $897.82/oz. To the downside, we find supports of $881.57, $877.02/oz, $873.74/oz, $870.47/oz, and $866.11. Gold is currently trading at $882.60s/oz.

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