The U.S. dollar had a big rally from July until just a few weeks ago, as the dollar started an avalanche slide putting in a small dead cat bounce last week. Friday, the USD closed on a 3-day low and should push gold prices higher in the near future.
The Gold Bugs Index is a great indicator and, generally, it leads the price of gold for up to 4 days on the daily chart. The daily HUI chart (gold Stocks) are something I pay close attention to, simply because gold stocks generally outperform the price of gold in rallies and vice-versa for corrections. I do think we could see prices move a higher in the next week or so; I think we are ever extended and selling will pull things back down.
The U.S. dollar looks to be headed lower and gold looks a little like it could be putting in a short term top here. This is when most traders start to get confused as some indicators will give a cross signal leaving you wondering what the heck to do next. When things get confusing I always step back, look at some longer term time frames like the weekly and monthly charts for gold and the HUI. Once my head is clear again on the direction of the market I look for my setups and enter when risk is less than 3%. While the markets are always somewhat confusing, it is important to stick with your trading strategy instead of rolling the dice and tossing your hard earned money into the market hoping it will move in your direction.