Similar to the relationship between the emini S&P 500 and cash Dollar Index (DXY), the spot gold-DXY relationship also suggests that gold prices are poised to test a key near-term range or channel boundary -- in this case, along its July-November support line, now at $1342 -- especially if the DXY pushes higher to confront its June-Nov down-trendline at 79.30.

The real question, however, is whether or not spot gold will hold at $1342, while the DXY stalls at 79.30. I don't have the answer to that question, but a test of the channel boundaries appears to be directly ahead.

 

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