Gold peaked at USD 1920.5 in early September 2011 approximately 4 months after the USD Index reached fresh 2 year+ lows at 72.50-73.00. Three attempts to retest the exuberant 1920.5 level failed over following months leading to a capitulation reflected in the 1523.0-1528.4 multi-month support break-down. As gold continued biting into the long-term gains, USD Index rallied strongly peaking simultaneously with the initial 1181.9 trough in gold. Indication that the price of gold was not falling any further at that time came after the USD Index broke down below the April 2011 – June 2013 uptrend-line leading into a multi-month consolidation.

Gold has followed the same pattern by moving within a major consolidation range. However, three consecutive lower tops were established at 1433.1, 1391.8 and 1344.3 since August last year, possibly shaping into a major descending continuation triangle. Within a context of an underlying bear market in gold, chances are for an eventual downwards resolution breaking the 1181.9-1185.2 one year+ base. Minimum targeted losses in such case would point to 950-1000 area in the coming months. Adding to the pool of evidence of a bearish scenario for gold is the negative correlation with the USD Index. In early September, we have seen the US Index breaking above the latest 84.50 July 2013 peak suggesting further gains into the 88.00-88.50 area. 



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