Gold has reached new highs over the past 24 hours, aided by the Indian Government's decision to buy 200 tonnes of the International Monetary Fund's gold at $6.7 billion, putting it as the 10th biggest holder of bullion in the world. The move also helped India diversify its reserves in a way that spreads its risk, which is over-weight with overseas currency. Of $285B in Reserve, foreign currency assets account for more than 90%, $268.3B, followed by gold at $10.3B, IMF's special drawing rights $5.2B, and a reserve position in the IMF of $1.59B mainly in the form of U.S. Treasury bonds.

The move to hedge the falling Usd value by India, that helped gold move higher, was a contributing reason for a push lower on the U.S. dollar index. Oil was also higher, and has risen by almost four dollars since yesterdays 76.50 support zone test.

As such, the major pairs are mostly higher, aided by S&P futures that were not able to break through the 1025 support area in the previous Wall Street session.  It seems that S&P is in a long corrective mode of the recent bear market from 1098 top.

Gold has been the most interesting investment of the past few months, as prices broke through the psychological 1000 level. This bullish gold move however, like every other bullish move, needs to take a rest, and a technical correction. This may happen if traders start to now book profits from the end of August 2009, when the recent bullish leg started.

From an Elliott Wave perspective, gold traded into an area around 1090-1100 where the top of the last impulse move may get hit.  As such, TheLFB.com technical team will be looking for a corrective move down in wave IV, near to the 1030 support area, as the market has already made five waves up in an extended wave III, shown on the chart above. The basic Elliott Wave rule is, that after every five waves, a correction should follow.