The US Greenback has posted some gains against some of its counterparts since the markets opened on Sunday, showing strength against pairs such as the Kiwi, Loonie & of course, Gold (XAU/USD)...even if they are likely temporary as investors see QE3 for what is is, a temporary band-aid and not a solution by any stretch of the imagination. XAU/USD has pulled back as a result after peaking last week just shy of the 12 month highs at 1790.50, with the pair falling this time around from a high of 1777.30. However, in February when the price hit its high, it dropped more than 1000 pips in one day and triggered a bearish trend that lasted more or less until the recent Bullish break out that began on August 21. Since then, the pair has been stair stepping its way upwards pausing every 2-300 pips for a minor correction, or consolidation. This is significant as we may just be seeing another consolidation before the pair makes a run to the November 2011 highs or beyond. Fibo projections suggest that we could see this pair rocket as high as 2350 but how long it takes to get there is not yet clear. If price breaks yesterdays low at 1753.80, we could see the pair fall to the Weekly S1 at 1737.37 which is also an area with numerous highs and lows going back to early 2011 and a string support level. If last weeks high is broken, look for a run to 1800 at least. Resistance in the bigger picture is key at 1790 and 1810, but there are many pips to be made on the way up, and it might not stop there. I have been bullish on this pair all year as evidenced from my previous articles on the subject, and I continue to maintain my bullish technical bias.
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