4 Hour Gold Chart

See the chart for some comments on the price action.

Also, Friday's open interest revealed that reluctance or lack of conviction on the part of the bulls that I noted. The reduction in open interest with the market pushing up against the $1410 level but failing to muster sufficient strength to take it out shows the hesistation on the part of the bulls to go after the bullion bank offers in a more vigorous fashion. Instead, they looked at the roadblock and decided that coming in front of the weekend, they might as well just lighten up a bit and come back and see what the market was going to give them come Sunday evening in Asian trade.

The battle lines have been drawn on the charts as the bullion banks will commit great resources to blocking a move past $1420. They know that such an event would trigger an immediate run to the all time high near $1432.

The bulls need to hold it above $1400 on any dip lower in price to prevent a move back towards $1390. They must also waste no time in pushing back against the Bullion Banks capping effort  if they are going to prevent some of their more fickle comrades from continued long liquidation as there is a serious attempt here by the bears to form a double top on the shorter term price charts.

The Dollar dropping below critical support at 77 level on the USDX gave gold a strong lift but it has recaptured that support level once again and by so doing, emboldened the gold bears. One can see the movement in the Dollar and the corresponding movement in the metal by observing the tick by tick price action.

See the technical analysis of the US Dollar that I posted over the weekend. The Dollar is trying to bottom here but if the bulls there cannot hold it above the 77 level as it goes into the closing period, it is very probable that the greenback is going to move down to 76. It just looks heavy. The bulls now have their back to the wall; if they fail to perform, things could get ugly in the Dollar in a real hurry.