Gold Tumbles Amid Broad-Based Dollar Strength

Gold is undergoing a heavy selloff right now in reaction to a combination of a huge pullback in the Euro combined with broad-based Dollar strength after an encouraging improvement in U.S. Building Permits. Today’s rally in the Dollar has had its expected impact on gold considering their negative correlation. Losses accelerated in the precious metal after it dipped below our 3rd tier uptrend line. Meanwhile, it seems that a retest of our 1st tier uptrend line and the highly psychological $1100/oz level could be in order. Attention will now turn to China with the release of GDP and Industrial Production coming during tomorrow’s Asia trading session. Furthermore, investors will receive EU PMI data along with U.S. weekly Unemployment Claims and the Philly Manufacturing Index. Hence, volatility could remain at a heightened state for the next 24 hours. That being said, investors should keep a close eye on the interaction between gold and its highly $1100/oz level should it be tested. Furthermore, investors should take note of signs of stability in the major Dollar crosses, particularly the EUR/USD. Once the EUR/USD does create a base this should yield stability in gold as well.

Present Price: $1113.30/oz

Resistances: $1114.45, $1118.16/oz, $1121.93/oz, $1125.93/oz, $1128.42/oz, $1134.33/oz

Supports: $1111.01/oz, $1109.15/oz, $1106.04/oz, $1100.44/oz, $1096.40/oz, $11093.29/oz

Psychological: $1100/oz