I am not sure what to make of Monday’s action and interaction between spot gold and EUR/USD. While the EUR/USD spiked nearly 1%, gold continued to languish.
Then again, the decline in gold from last Thursday’s rally peak at $1680.35 has retraced exactly 50% of the prior upleg, yet EUR/USD retraced its entire prior upleg--and then some.
Yes, there is definitely a disconnect between the two markets, each moving to a different drummer for the time being. Be that as it may, if EUR/USD can manage to claw its way above its nearest-term resistance line at 1.3170, then I will be focused on the behavior on spot gold and the SPDR Gold Shares (GLD), which should follow the lead of the lower USD (higher EURO).
At this juncture, only a decline in gold that breaks and sustains beneath $1638 will be cause for concern--that a test of the prior two important pivot lows at $1632.39, and at $1612.47 could be approaching.