The real trend behind Gold.

We have constructed a quick cross study of the 2 key factors that affect Gold's price currently: the equities and the Dollar Index. For this examination we picked the S&P (SPX) and US Dollar currency index (DXY) to compare with Gold's futures (GC1!).

We see that since the stock markets stabilized last May, Gold quickly picked up the pace suggested by the rising Dollar and reached a near 1,165 Low mid August and consolidated as the Dollar tested a support. However when the Gold price tried again to follow the Dollar's current Channel Up on 1D (MACD = 0.390, RSI = 54.242), it was discontinued by the strong decline on the stock markets (namely S&P for this study). Despite however the fact that S&P broke below its 0.786 Fibonacci level (2,640) since April's lows, Gold has only managed to test its own 0.382 (1,245) retracement level. This clearly shows the long term bearish bias on Gold, suggested by the long term rise on the Dollar. As soon as the stock markets stabilize again (can be another 3 month period, but with the end of year rally bias, should be shorter), then the Gold price should harmonize and follow its negative correlation with DXY lower.