On one hand, gold prices cannot seem to catch a bid today, but on the other, spot gold has undergone a very orderly pullback from last Friday's high at $1250.45 to this morning's low at $1206.50 (-3.5%). For a market that needed a correction, the weakness in gold has the right look of a minor pullback within an incomplete upleg off of the Feb low. Add to the gold analysis, the behavior of the Dollar Index (DXY), which has turned up sharply in the last two hours largely in response to reports of German resistance to approval of the $1 trillion loan package for the entirety of the EC (as distinct from the 22 billion EUR package specifically for Greece), and because of reports of an impending ban on German equity naked short sales.

In other words, there are new reasons emerging to exit the EUR in favor of the DXY. Let's remember that from early Feb to this week, flight into the DXY was accompanied by flight into gold as well. With the DXY poised to reverse to the upside off of its very shallow 2-session pullback, perhaps gold and the gold complex, too, are nearing another sympathetic run on the upside.

By Mike Paulenoff

Mike Paulenoff is author of MPTrader.com (www.mptrader.com), a real-time diary of his technical analysis and trading alerts on ETFs covering metals, energy, equity indices, currencies, Treasuries, and specific industries and international regions.

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