Gold is defying gravity by shaking lose of its psychological $950/oz trading zone. The precious metal is surging to the topside beyond August highs despite recent strength in the Dollar and weakness in U.S. equities. Gold is disregarding its negative correlation with the Dollar and positive correlation with equities. We have received data with a mixed to negative bias so far this week, and investors are becoming increasingly uncertain in regards to the strength and longevity of the economic recovery. Therefore, we could be witnessing a gold rush as investors head for safety. Gold's eclipse of its August highs is a very bullish sign and could be indicative of a large leg higher. Crude and the S&P futures have experienced large sell-side action lately, indicating the present leg down in U.S. equities may have more room to go.

Meanwhile, we've readjusted gold's trend lines to account for today's high volatility. The precious metal could have considerable topside potential if it can get past our new 2nd and 3rd tier downtrend lines. If so, a retest of 2009 highs and the psychological $1000/oz level seems likely. As for the downside, gold has all three of our uptrend lines along with 8/4-8/6 trading zone. We'll keep a close eye on gold's interaction with its correlations to see if there is a lasting shift.

Present Price: $972.00/oz

Resistances: $974.04/oz, $975.86/oz, $978.60/oz, $982.26/oz, $985.00/oz

Supports: $971.91/oz, $969.78/oz, $968.25/oz, $964.90/oz, $960.64/oz

Psychological: $1000/oz, $950/oz

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