The bulls will be disappointed at the lack of follow through buying after the key reversal day on Monday, though the "bullish engulfing" candlestick has not been invalidated - however it will only take another small decline today to achieve this.
With Ben Bernanke's testimonial this afternoon and the FOMC minutes released at 7pm this evening, we could see a lot of volatility in gold today and the direction for the next few weeks may be determined by today's events and trading action.
The dollar is still having trouble breaking above key resistance at 84 - a break of this level will see a strong dollar rally towards 88, which would have bearish implications for gold - conversely a failure to break through this area could see a sell off in the dollar, boosting gold's appeal.
Oil has failed to break resistance at $97-98 again and has sold off a little - a break of this key level will see a strong rally in oil towards $106, however the repeated failures at this resistance area could see the bulls throw in the towel and the bears reassert control. A break below $95 would suggest further declines.
With oil and the dollar at such critical areas and gold attempting to form a "double bottom" at 1337, today's events could have a long lasting impact on the future direction of all three markets.
Today's video looks at the recent trading in oil and gold in more detail and sets out our strategy for our next trade.