Both gold and the dollar reached hidden-pivot targets yesterday that deserve our close attention. I’d advertised a 417.70 downside objective last week for Comex June Gold and an 86.33 rally target for the Dollar Index. Both objectives were very nearly met on Monday, with the Dollar Index topping at 86.39 and June gold bottoming at 418.20. I usually like to see my targets reached very precisely, but in this case, because the two vehicles have been approaching potentially important swing points more or less in-synch, we can allow a few ticks’ leeway. Under the circumstances, yesterday’s price action could prove to be an important turning point for both vehicles.

I don’t mean to imply that you should mortgage the farm at these levels to make a bullish bet on gold or a bearish one on the dollar. In fact, I still have my doubts that bullion will end its six-month wallow before it has shaken out bulls with a feint below $400. Opinions aside, though, from a hidden-pivot perspective this is the best opportunity gold has had to turn around since late March, when it approached a similarly important hidden-pivot support that subsequently gave way.

This time, to be mechanically objective in assessing the significance of any rally that unfolds, we should set the bar at 432.60 for the June contract, since a print at that price would create a bullish impulse on the daily chart. I should also mention that the euro has so far failed to make a low corresponding to the Dollar Index rally target already reached. It would have been nice if all three vehicles –the dollar, gold and the euro – were perfectly in synch, but two out of three isn’t bad. In fact, the euro’s recalcitrance could prove to be especially bullish for gold (and bearish for the dollar), since trend reversals that occur without reaching their hidden-pivot targets often signal the onset of relatively strong countertrends.