Gold in Incomplete Recovery Rally, While Dollar Pressuring Resistance

I consider Dec. Gold price action lately, though weak, to be relatively inconsequential technically at the moment. While a closing break of its exponential 200 DMA at 1276.70 certainly would be another negative sign, only weakness that breaks the 10/06 low at 1262.80 will argue that a new downleg is emerging in continuation of the larger decline off of the 9/08 high at 1362.40, that will project into the 1220/00 multi-month support zone once again.

Barring such a break of 1262.80 however, I consider Dec. Gold to be in the grasp of an incomplete recovery RALLY period off of the 10/06 low (1262.80) that has unfinished business on the upside into the 1340 area prior to completion.

To trigger re-ignition of upside traction, Dec. Gold needs to hurdle and sustain above 1284.50 for starters.

And what about the influence of the U.S. Dollar (DXY)? The attached chart shows that DXY certainly has carved out a rounded Aug. - Oct. bottom pattern that is putting upward pressure on key resistance at 94.15/30, which if hurdled and sustained, certainly will trigger higher projections into the 97.00-98.00 that, from the perspective of its traditional inverse relationship with Gold, definitely will create additional headwinds for the precious metals.

If that relationship turns out to be the key, overriding influence on Gold prices, well, then we should expect Gold to head south. However, if the Dollar is experiencing upward pressure because 1) of expectations of faster growth and higher interest rates that imply a surprising pop in inflation, or 2) because geopolitical tensions are rising, or 3) both conditions, then perhaps otherwise traditional Dollar headwinds smacking into the Gold market will be much less impactful.