Gold is bouncing back above our key 3rd tier downtrend line following a pullback after testing February highs. However, volume has been tailing off during the precious metal's decline, indicating there is not a ton of weight behind the movement. The hesitation and pullback is not surprising considering the rapid pace with which gold tackled $1000/oz. That being said, near-term momentum is still in favor of the uptrend considering Tuesday's corresponding technical breakout in the EUR/USD. Gold exhibits a strong negative correlation with the Dollar, and the key devaluation of the Dollar this week bodes well for the precious metal. It will be important for gold to fight back above our 3rd tier downtrend line since it runs through February highs. In succession, gold can position itself for more exciting near-term gains to the topside. Meanwhile, our 1st tier uptrend and downtrend lines are approaching their inflection point. Gold has been ahead of the ball thus far, so the collision of trends could take place as China releases its Industrial Production data. Recent movements in gold and the FX markets are in favor of strong Chinese data. If our prediction holds true, gold could continue its rapid ascent shortly. However, a setback in China's Industrial Production data could result in appreciation of the Dollar and further profit taking in gold. Beyond February highs, gold next technical barrier is March 2008 highs.
Resistances: $992.21/oz, $994.55/oz, $996.62/oz, $997.82/oz, $100.63/oz
Supports: $988.94/oz, $986.91/oz, $985.51/oz, $982.70/oz, $980.52/oz