Gold shined again yesterday, separating from $1000/oz and February 2009 highs on its way towards March 2008 highs. Investors snatched up the previous metal in light of the continual selloff in the Dollar. Gold continues to exercise a positive correlation with U. S. equities, so a breach of 1050 in the S&P futures was more than enough of an incentive for investors to rush gold. We find little reason to favor the Dollar nor frown upon U. S. equities over the near-term, thereby giving gold the opportunity to tackle
2008 highs.

However, March 2008 highs could still prove to be a challenging immediate-term obstacle should they be encountered. Furthermore, we recognize considerable immediate-term resistance in the EUR/USD at 1.50 and support in the USD/JPY at 90. Additionally, the GBP/USD is floating around 1.65 as the currency pair battles the BoE’s dovish monetary policy.

Considering the extend of the rally in gold and equities as well as the heavy sell-off in the Dollar, consolidative profit-taking around present levels would not be surprising for the time being. Furthermore, news will be relatively quiet on the econ data front until the EU releases its wave of PMI data next Wednesday. Hence, investors may take the next few sessions as an opportune time to lock-in some profits. Regardless, the medium-term uptrend in gold is alive and well, and we expect March 2008 highs to fail over the near-term.

Present Price: $1015.48/oz

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