Gold Prices Consolidate
Gold has been underpressure the last few weeks and is now consolidating at lower levels.It appears that the lows are in for now and the next move will be higher.There have been many excuses as to why gold has been trading lower, with onebeing the strength of the U.S. dollar. If that's the case, we would ask why goldwas weak as the dollar was collapsing from 103 to 88.
When looking at anymarket, traders and investors try to find correlations. Unfortunately, that ismore often than not the case. All markets trade in different phases andalthough there is a direct correlation between commodities and the dollar overtime, they are related during different cycles.
Markets and charts leaveclues and footprints, and the footprint in gold is consolidation at the bottom,indicating a rally is forthcoming. The sellers appear to be on their way out,leaving room for new-money buyers to step in. The blow-off to the downside onMay 22 indicates a bottom has been achieved. There is no guarantee thatthe bottoms are in and gold can still go either way; however, probabilityfavors a rally from here.
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