In December’s update [Update on Gold: Dec 14, 2015] we discussed the importance of the dollar on gold’s future price moves.

…the weakness in DX since Dec 3 suggests there’s a decent chance of the Fed punting.  If DX plunges further, GC’s 4th bounce could be a doozy: 1150-1180 for starters, and 1286 after that.

The Fed didn’t punt.  They increased rates by 0.25% as expected, and DX rallied for a whole five days.  After peaking on Dec 21, DX has sold off in fits and starts [see: Update on DX Feb 9, 2016.]  GC spiked, reaching 1150 on Feb 4 and 1180 four days later.Today, it backtested the TL at 1180 and is threatening to break higher.  Does it still have legs?

continued for members…

Note that GC has officially broken out of the falling red channel — affirming the primacy of the purple one instead.The downside case, therefore, becomes a backtest of the red channel top at around 1130.  Note that the SMA200 is currently at 1127.  The indicator to watch, here, is the red TL at 1180.

The upside case now focuses on the red, dotted TL connecting several tops since May 2013.  It intersects the white .618 on 1207.60 around Feb 18.

If that’s broken, then the white .886 at 1277.90 comes into view.  Note that it’s in close proximity to both the yellow .382 at 1286.30 and the purple channel midline currently around 1274.Which is more likely?  It still depends on the dollar, which just yesterday reached important channel support [see: Feb 9 Update.]  If GC can push through 1207, it has a very good chance of zipping up to 1278.  I’d give it another day or two, but be prepared to switch sides if it drops back through 1172 or so.

GLTA.