Wednesday, May 2, 2018

Despite The US Dollar Getting Stronger The Gold Holds Quite Well

After the FED's decision to keep interest rates unchanged the gold was quite strong. Despite the US dollar making another ultra-short term top, gold prices held well:


Note that yesterday (May 1) the US dollar broke above its resistance (the red line) but gold did not break below its ultra-short-term support (the green line). So there is a small, positive (for gold) divergence.

What does it mean? Generally, in the long term it means nothing at all (the big picture remains unchanged) but in the ultra-short-term we may see gold prices going a bit higher now (as I wrote in my latest piece - it is a very primitive short term trade). 

What is more, the GDX / gold ratio is supporting a relatively bullish thesis on gold:

source: Simple Digressions

As the chart above shows, since late March 2018 the ratio has been in its upward trend. Interestingly, this time it is a promising medium-term signal (the shares of precious metals mining companies are stronger than bullion). It looks like Mr. Market wants to tell us:
"Not everything is that bad with precious metals as it looks"


  1. Infatti è dal 7 marzo che il gdxadp non tocca più i - 100

    1. Alberto,

      Yes but now gold is supported by the goldollar index, which makes a bullish thesis on precious metals much more viable than it was before

  2. Si. Anche il più ampio indice commdoll aiuta?