The big increase in the Commercials' short positions before the last update was expected to lead to a reaction in gold. It did and it was rather fierce, as can be seen on the 1-year chart. Following the reaction the price has stabilized in the mid-$420's and the overall picture, on an intermediate or medium-term basis, remains one of a trendless market, although this situation is not expected to persist for much longer. The long-term trend remains up, with the market believed to be consolidating above important support prior to a new upleg.

The current neutral pattern is clearly visible on the 1-year chart, on which the triangle boundaries have been opened out due to the continuing state of indecision in the market. The old triangle boundaries are shown as dotted lines, as these may still have validity, especially if we see more whipsaw action in the near future.

On the long-term 5-year gold chart we see that the price has broken its long-term uptrend, but only marginally. This chart continues to look favourable as the price is in the vicinity of the still rising 200-day moving average, and not far above a zone of important support.

The dollar remains in an uptrend, despite today's dip, but is overbought and in a zone of substantial resistance.

The COT chart for gold shows that the Commercial's short positions have dropped from their recent peak, but not by enough to inspire much confidence over the short-term. Of course, we need to keep in mind that these COT charts only include data up to last Tuesday's close, which means that we don't know what happened after last Tuesday - the Commercials could more covered more aggressively.