Gold Continues To Experience An Odd, Positive Correlation With U.S. Stocks

Gold is turning back from our 2^nd tier uptrend line after the precious metal was unable to power through our 2^nd tier downtrend line.  Tuesday’s initial pop came on a 4^th straight session of declining volume, showing bulls could be running out of steam for the near-term.  Gold continues to experience an odd, positive correlation with U.S. equities.

Analysts have been cautioning that the equity rally has overheated, meaning a pullback is overdue.  If this happens, gold may be inclined to follow suit.  Meanwhile, gold remains comfortably above the highly psychological $900/oz level.  The performance of gold has been very unpredictable lately since it is difficult to decipher the driving force behind gains.

Could it be the fear of future in inflation in the wake of unprecedented amounts of quantitative easing, or are bulls riding on the fact that China is using the pressure metal as a way to diversify its reserves from the U.S. Dollar?  Regardless, the positive correlation with U.S. equities lives on.  Therefore, reference the S&P futures.

Fundamentally we find supports of $917.65/oz, $915.94/oz, $914.35/oz, $912.02/oz, and $910.22/oz.  To the topside, we see resistances of $920.75/oz, $922.49/oz, $925.30/oz, $928.10/oz, and $931.99/oz. Gold is currently trading at $918.20/oz.

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