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.

Meanwhile, attention will remain focused on the U.S. and Britain since we will receive more important econ data early next week in conjunction with the Q3 earnings flow. A recovery in British econ data coupled with more optimistic U.S. numbers would likely accelerate the broad-based devaluation of the Dollar and send gold higher. However, uncertainty has re-entered the marketplace, so investors should be wary of upcoming releases.

Technically speaking, gold's consolidation is building a solid base should the precious metal decide to head towards $1100/oz. Furthermore, gold continues to set higher lows and has avoided the idea of heading beneath $1050/oz and 10/16 lows. However, it seems gold will reach a breaking point in the near-future, and we will have to wait and see whether the Dollar works in favor of the precious metal. Previous October highs continue to serve as a technical barrier along with our downtrend line. As for the downside, gold has a couple uptrend lines serving as technical cushions to go along with 10/21 and 10/16 lows as well as $1050/oz. For the time being, investors should pay particularly close attention to the EUR/USD's present interaction with its highly psychological 1.50 level.

Present Price: $1057.90/oz

Resistances: $1058.75/oz, $1061.40/oz, $1065.15/oz, $1068.06/oz, $1070.66/oz

Supports: $1055.46/oz, $1051.91/oz, $1048.62/oz, $1045.32/oz, $1042.96/oz

Psychological: $1050/oz, $1075/oz, $1100/oz