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The premarket attempted to take out the 139.54 resistance point and failed as of now. A failure to close over this point will bring gold down again.  Watch to see whether the close today is over that number.  If not, the gold will fall once again.  This sort of move up to resistance is classic in the beginning of a correction.  On the other hand, if it closes above that number expect a retest at the last high.  Read my prior posts on gold for more.

UPDATE @ 2:01 pm ET 3-21-2011: GLD has now failed to hold a rally above 139.54.  This could be a top in a bounce that will lead to more downside now.  If we don’t have a close above that level, the correction that started at the topping formation will likely continue to lower lows.  (This pertains to trading positions only.  See prior posts)

UPDATE 3-22-2011 @ 2:40 pm The GLD is at 138.97, which is below the 139.54 overhead resistance point that the market was challenging.  As the Euro is not making new highs and the US dollar index now MAY rally (has not yet; see us dollar index post with update), gold will be pressured in US dollars terms – will be cheaper in US dollars.  The rally back in GLD managed to close the gap which is a common finding with GLD, but the attempt to close above 139.54 failed yesterday.  It was a failed breakout.  I expect GLD may descend to about 132 or possibly 128 before this correction ends.

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© 2011 David B. Durand, M.D. All rights reserved.