The continued sell-off of the dollar today is giving some dollar bears/QE3 lovers an excuse to open their mouths. I don’t however view this as a worrisome situation because from a chart standpoint we are in a support area. If, however, the dollar ETF, UUP, trades below 21.24 we may need to take a closer look.
The gold / dollar relationship as expressed by the ETF ratio of GLD to UUP broke down for gold on a macro level on 9/21/11 with a close below 8.01. We are well below that area currently in the 7.40 to 7.50 area. When we see this ratio trade through the 4/8/11 level of 6.70 is when you will see the wheels come off of gold and the dollar start streaking higher.