Gold isn't trading like a safe haven—it's trading like a currency.
Gold retested major resistance on Thursday night, reaching $1,397.10 before falling back. The market was able to recover from pullbacks earlier Thursday to close back above $1,383.90. But early Friday trading finds gold getting back to this level from the highs.
We have been looking at a chart that discounts the quick move through the $1,411.70 retracement level up to $1,413.10, and this shows a market that has now tested resistance at $1,397 four times and has failed (and fallen back at least $10) each time. Traders have had a tremendous opportunity hedging longs as well as selling outright against this level.
Our level of support at $1,375 held very well Thursday, and a retest Friday will be very negative to the bull camp. However, the line in the sand is the support ranges from $1,464 to $1,467.70. If the market breaks this level, expect to see gold close at the lowest level in more than two weeks, which will put the bears in complete control. A close above major support at $1,380 to $1,383.90 will likely keep the market neutral to the slightest bit positive into the weekend.
The reality is that there is no imminent catalyst to help this market follow through. Recently, as the Japanese yen has moved lower, so has gold. The yen is positive against the U.S. dollar on Friday, but is still trading far from the highs (just as gold has fallen back). If the yen can climb back, you should expect gold to follow through to $1,400. Yes, this means that gold traders should also gauge the dollar, which is trading one point from this week's new swing high at $83.50. If the Dollar Index can climb back above 84, the yen should press lower and so should gold.