Gold Rallying In US Dollars, Update on Gold/S&P, Gold/USD, USD/SPX, USDX

It's been an interesting week.  If the US Dollar Index (Chart 2) breaks support and tests the uptrend (79.5), 50DMA (78.84) or floor support (78.5), Gold priced in US Dollars (Chart 1) could test $1,150 aka the January highs.  In the first chart you can see it pierced through a downtrend resistance level and is riding the 50 and 100 day moving average.  Gold in US Dollars is currently trading at 1,134.  1,150 is an important resistance level and will prove if the mini inverse head and shoulders bottom has legs.  If that level is broken with momentum it could possibly be a decent hedged long to test the ultimate highs and beyond (like I said earlier 2/21).

Regarding Gold v. S&P (Chart 3), they've been dancing since the beginning of the year trading between .99-1.02.  When gold broke out at the end of 2009 (Oct-Dec) the Gold/SPX ratio went from .95-1.10.  Por último, look at the USD/SPX ratio (Chart 4).  With the recent rally in the S&P and a stagnant Dollar, the USD/SPX ratio is now testing the 50 day moving average and December support level.  If Marc Faber is right that the Euro gets squeezed to 1.40, that will support the USDX correction trade.

A bunch of decisions need to be made in the overall market. I'm waiting for a big catalyst even if technical.  Btw:  Greece braces for deeper spending cuts, as EU tightlipped on rescue plan (AP) ("We are today in a state of war in front of negative scenarios for our country," Prime Minister George Papandreou said."). 

Gold Spot/US Dollar (courtesy of

US Dollar Index (courtesy of

Gold/SPX Ratio

US Dollar/SPX Ratio