Gold and the SPDR Gold Shares (GLD) has rocketed off of its lows. This is largely in reaction to the weaker dollar that emerged in the aftermath of the disappointing jobs data and because Mr. Market senses that the government may well have to pump additional substantial liquidity into the economy to avert another deflationary downward spiral, which is perceived to be bullish eventually for gold.

Spot gold plunged to $986 in overnight trading, but has reversed with a vengeance. Let’s notice that prior to the employment data, the Dollar Index (DXY) once again popped to 77.45, but thereafter reversed strongly to 76.70, leaving behind yet another failed near-term upside breakout. Meanwhile, spot gold prices have reversed up nearly 2% off of its earlier low, but has yet to hurdle key near-term resistance at $1011-1014. If spot gold manages to climb and close above $1014, my work will be warning us that a new upleg likely is in progress that projects next to $1050-1060.

Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com.