Gold's overall situation remains little changed since the last update, with the price remaining within the confines of a large holding pattern that started to form early last December. The only significant difference is that a short-term base has formed above the lower support line of the pattern and the price is now rising back up towards the upper resistance line of the pattern. The pattern is a symmetrical triangle, and back in May it looked as though the price was breaking down from a tighter triangle, but all that happened is that the triangle opened out into a broader one, with the result that the intermediate neutral trend continued.

The breakdown in May resulted in a breach of the long-term uptrend channel, shown on the 5-year chart below, however, the breach has not so far exceeded the 3% margin within which the uptrend can continue to be considered to remain in force. If it remains within this margin and then a new uptrend develops, the long-term uptrend line will simply be redrawn across the recent lows. Even if we see continued weakness, and the 3% margin is exceeded, it will not mean an end to bull market, rather, we can then expect a larger order correction to the entire bull market to date - what Elliot wavers would expect to take the form of a 3-wave correction to a 5-wave uptrend.

As things stand the uptrend is considered to remain in force, with the price currently consolidating above the important support in the $410 - $430 zone. Gold is a buy anywhere near the lower line of this symmetrical triangle pattern, with a stop either beneath the lower line, or beneath the "round number" support at $400. A break above the top line will of course be taken to signal a fresh intermediate uptrend.

The COT figures are now supportive of a rise, with the Commercial's short positions having dropped back in recent weeks, along with the open interest level, although there is room for improvement in the weeks ahead.

The dollar has clearly broken out of its long-term downtrend, although it is now rounding over beneath heavy resistance in the 90 area on the index, and continues to be vulnerable to a significant reaction. It is likely that we will witness a lengthy 3-wave upward correction to the entire bear market decline from early 2002.