1. Gold is rallying today as the US dollar slumps and the gain is due to the US dollar sell-off.  Kitco.com reports that gold is up ENTIRELY due to the dollar rally in fact.   Gold spot is up 0.91% for the day due to a 0.96% increase thanks to the US dollar slump and gold SELLING that brings gold down by 0.05%.  So it is 0.96%-0.05% = 0.91% GAIN but it’s all because of a lame buck.

If you want to read more and understand this, you can read it here: Gold Trading Signals: Don’t Be Fooled!

Where is gold precisely compared to the prior high and what was that high?  I did not find it on Kitco.  I had to call Schwab and they kindly provided the number off their Bloomberg.  It was 1575.79 on 5-2-2011.  The high today per Kitco was 1589.40.  It’s now at 3:45 pm ET 1581.40.  This means that the next important gold breakout is here.  Follow me on Twitter to stay up to the minute, because there are true and false breakouts.   Update after hours 7-13-2011: The breakout is still intact as of 8:40 pm ET with spot gold at 1588.97

2. The stock market liked the fact that Dr. B has reiterated his willingness to do more quantitative easing (read that print money we don’t actually have).  The market knew this though, so the earlier gains are slipping away a bit.  At this point the stock market rally is fading fast (3:23 pm ET).  If we close below yesterday’s high, be suspect that this rally is much of anything.

3. The US Dollar Index as represented by UUP needs to stay above 21.42.  It fell into the middle of the pennant that had formed over the past 2.5 months after breaking out above the top resistance line of the pennant just two days ago.  Falling through the bottom line of the pennant could bring the dollar back to the prior lows.  My feeling is that the dollar is going to continue holding onto some strength and see-saw back and forth as Europe gets its act together, which it has definitely not.

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