The dollar’s modest rally yesterday stalled within mere hundredths of a point of a hidden-pivot target, but don’t expect this flimsy impediment to withstand another charge. If and when it’s breached, the March dollar contract will become an odds-on bet to climb at least another two percent, putting further pressure on gold quotes that have barely managed to hold their own since dropping precipitously in the final week of 2004 and the first week of the new year. I’ve already precise provided downside targets for the XAU, the HUI and bellwether Newmont, but below is another to help corroborate a potentially important turn in the dollar/gold relationship.  Basis the March contract, the Dollar Index looks to be staging for a run-up to at least 85.47, provided it can get by a lesser hidden pivot at 83.76 that capped Tuesday’s thrust. We should pay close attention as the higher target is approached, since its breach, even if slight, would imply that both bullion and the dollar are likely to continue in the same direction they’ve been moving – lower and higher, respectively.

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