In my last piece on the US dollar
and gold (October 21, 2018) I made the following conclusion:
“It has to be also noted that the excessive optimism among the
speculators trading US dollar index futures is accompanied by extreme pessimism
among their fellows trading gold futures. As a result, there is an extremely
positive mix of sentiment, supporting a bullish thesis on gold and the precious
metals market”
Since the publication the gold
has not changed its price while the US dollar is up 0.4%. So, generally, both
instruments have done nearly nothing. It means that it is a good time to look
at the general picture once again. Here it is:
Source: Stockcharts
I think the chart shows quite an
interesting pattern:
Logically, when the US dollar is
topping the gold is supposed to test its previous bottom but…it is not the case
now. Note that at the latest US dollar top (October 31, 2018) the gold, instead
of getting close to the latest bottom at $1,170 - $1,180 per ounce, was
standing at $1,215 per ounce.- The US dollar is printing a double top formation (the green, horizontal line)
- The gold is relatively strong, compared to the greenback (two red circles)
In other words, the gold is
suggesting us that the scenario discussed in my latest articles (bullish
for gold and bearish for the US dollar) is still valid.
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