Often is the case that the dollar will reverse just before or within days of a major anticipated news event. If I'm right, today's potential bottoming tail candlestick just shy of the Fed's announcement tomorrow may be an indication of a Bernanke disappointment. On this basis, the dollar has bottomed and will likely undergo a sharp upward reversal into the remainder of this week.
If however the market likes what it hears since now days language itself is a measure of stimulus, then expect to see a sharp 1 to 2 day downdraft which will finalize this current decline.
Either way, I do not expect this deeply oversold condition to at all be making any accommodationgs for QE3 tomorrow, or anytime soon for that matter.
IF the dollar does drop another day or two, Gold will likely make an advance to psychological resistance at 1800 before marking a short-term top. Otherwise, a top is in, and prices should intiate into a corrective phase over then next 3 to 4 weeks stalling at its 50 day moving average.
I also want to emphasize that this upcoming pullback should reside anywhere between 1650 and 1700, but it may be the very LAST time this year we ever see the metal price trading here again. The Reason being is a soon glory cross that will confirm the re-emergence of a new bull market.
Say what you want about moving averages, but they seemingly have provided as a worthwhile indication of trend changes throughout history. And while no indicator is perfect, judging by price alone, the yellow metal has lately been certainly acting very strong.
I expeect by mid October this cyclical turning point will be within a larger framework of drastic inflationary measures pursued by all nations to artificially revive their homeland currencies. Consequently, Gold will materialize into a hyper-inflated market that decouples dramatically from all other asset classes.
Remember, 95% of people are not actually convinced of a GOLD BULL until the trend is in its latter stages. And only then does it become too expensive to buy. The only arguable explanation that would end the bullish case is until real rates surpass one, or at least when the public figures out that those levels can be realized.
I don't see that happening anytime soon, especially not tomorrow,do you?