Gold Consolidates After Huge Gains

05 November 2009 @ 11:05 am EDT

Gold is consolidating around the $1090/oz level after its impressive topside breakout earlier this week. Investors are monitoring the Dollar as the markets digest today's monetary policy decisions from the ECB and BoE while contemplating a test of the psychological $1100/oz level. Regardless, this week's breakout was a sign of strong support for gold's uptrend since the precious metal moved without full participation from the Dollar. However, the sustainability of gold's new near-term uptrend will likely depend upon a broad-based devaluation in the Dollar since the two are negatively correlated. Hence, investors should keep a sharp on the interaction of gold's correlations with tier respective topside technicals, most notably the EUR/USD and AUD/USD.

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