The greenback has indeed set the direction for gold. In the last hour, the U.S. Dollar Index has vaulted almost all the way back to 77. And, gold has broken its range to sink below yesterday's low. As I write this post, spot gold's rebounded slightly from its low of about US$1,119/oz reached right after 10:30 AM ET.
Where gold goes today is anybody's guess, but the morning prognosis doesn't look all that good.
Update: The U.S. dollar index did turn down after almost reaching 77, but not by that much; currently, it's recovering. Nonetheless, spot gold managed to climb up above $1,136; that level erased almost all of the mid-morning decline. As of 1:36 PM, spot gold's at $1,136.10.
Update 2: After reaching that level, gold subk a bit and then turned upwards again. For the last hour, it's been drifting; as of the time of this update, spot gold's at $1,137.10
I realize I'm drifting into iffy territory here, but yesterday's slamdown is beginning to look orchestrated. By "orchestrated," I don't mean rigged; I mean launched to hit the stops and/or to throw other players into a selling frenzy. There's been a significant lack of follow-through today. Example: A decline did start at 10 AM ET, but it was reversed before 12:30 PM ET. As of now gold's higher than it's been all day. If some punter tried the same trick twice this morning, it's backfired.
Whether the process was "enhanced," the trigger really was the People's Bank of China's attempt to moderate the inflation by bumping up the reserve-ratio requirement. Without a plausible and relevant event-trigger, any attempt to jack the market around is likely to be futile.