Gold is experiencing a sharp retracement from the highly psychological $900/oz level and our 2nd tier downtrend line in reaction to the S&P futures leaping to new 2009 highs. Hence, the precious metal continues to follow its negative correlation with U. S. equities, even if it registers relative strength on the knowledge that China is buying up gold to diversify its reserves.

Even though gold is showing this relative strength, losses in the precious metal could accelerate if it does in fact kiss $900/oz goodbye this time around. Due to the vast fundamental strides made by global equities over the past 24 hours, we wouldn't be surprised to witness gold buckle under the pressure of its downtrend.

Despite the negative developments in gold, we could see a nice decent sized pop up in the precious metal today as investors may be inclined to take profits in equities with the S&P approaching 900. Therefore, we wouldn't be surprised to see gold head back up towards our $889.87/oz resistance today. The key to the downside will likely be our $877.79/oz support. If this level doesn't hold, we could see near-term losses accelerate. Keep a close eye on equities as the two investment vehicles will be closely tied.

Fundamentally we find resistances of $887.19/oz, $889.87/oz, $893.01/oz, $896.59/oz, and $899.72/oz. To the downside, we see supports of $882.04/oz, $880.03/oz, $877.79/oz, $874.88/oz, and $873.09/oz. Gold is currently trading at $884.40/oz.

Copyright 2009 FastBrokers, Latest Forex News and Analysis for Forex, Bullion and Commodity Traders. 

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