Gold's Rally Cools as the Dollar Strengthens

21 August 2009 @ 03:47 pm EDT

Gold is dipping back towards $950/oz and our 1st tier downtrend line as both the GBP/USD and EUR/USD contract. Gold managed to propel from our 1st tier uptrend line yesterday in reaction to a rally in U.S. equities along with a deflating Greenback. However, volume is declining on the buy-side while our 3rd tier uptrend and 1st tier downtrend lines reach tier inflection point. We believe this collision could carry some weight since we notice trend inflection points in the GBP/USD, EUR/USD, and USD/JPY as well. Furthermore, volatility is picking up in U.S. equities and the S&P futures are still debating 1000 as crude battles $70/bbl. Therefore, a sizable breakout in either direction over the next few trading sessions wouldn't be uncalled for considering markets are at a critical juncture.

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