By | October 23 2009 3:12 PM

Gold is recovering from earlier losses after edging beneath our 2nd tier uptrend line and tapping its psychological $1050/oz level. Gold was initially hit by the massive selloff in the Cable in reaction to a shockingly negative Prelim GDP release. However, EU PMI data printed positively mixed and gold continues to take its cue from the Euro and Aussie. As a result, gold is holding strong above $1050/oz while continuing its consolidative pattern. We still believe the wedge applies, and we may witness an inflection point once our downtrend line collides with our 2nd tier uptrend line. That being said, gold's uptrend is alive and well despite uncertainty regarding Britan's economic fundamentals. U.S. Q3 earnings and Existing Home Sales also came in better than expected today, and increased optimism surrounding the health of America's economy bodes well for gold's medium-term outlook due to its negative correlation with the Dollar. Although the Dollar is strengthening today, it's reasonable to believe that the Euro and Aussie can head higher while the Pound slides. After all, we've seen this negative correlation occur only recently.