Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19
Stocks Market Investors Worried About the Fed? Don't Be -- Here's Why - 13th July 19
Could Gold Launch Into A Parabolic Upside Rally? - 13th July 19
Stock Market SPX and Dow in BREAKOUT but this is the worrying part - 13th July 19
Key Stage 2 SATS Tests Results Grades and Scores GDS, EXS, WTS Explained - 13th July 19
INTEL Stock Investing in Qubits and AI Neural Network Processors - Video - 12th July 19
Gold Price Selloff Risk High - 12th July 19
State of the US Economy as Laffer Gets Laughable - 12th July 19
Dow Stock Market Trend Forecast Current State - 12th July 19
Stock Market Major Index Top In 3 to 5 Weeks? - 11th July 19
Platinum Price vs Gold Price - 11th July 19
What This Centi-Billionaire Fashion Magnate Can Teach You About Investing - 11th July 19
Stock Market Fundamentals are Weakening: 3000 on SPX Means Nothing - 11th July 19
This Tobacco Stock Is a Big Winner from E-Cigarette Bans - 11th July 19
Investing in Life Extending Pharma Stocks - 11th July 19
How to Pay for It All: An Option the Presidential Candidates Missed - 11th July 19
Mining Stocks Flash Powerful Signal for Gold and Silver Markets - 11th July 19
5 Surefire Ways to Get More Viewers for Your Video Series - 11th July 19
Gold Price Gann Angle Update - 10th July 19
Crude Oil Prices and the 2019 Hurricane Season - 10th July 19
Can Gold Recover from Friday’s Strong Payrolls Hit? - 10th July 19
Netflix’s Worst Nightmare Has Come True - 10th July 19
LIMITLESS - Improving Cognitive Function and Fighting Brain Ageing Right Now! - 10th July 19
US Dollar Strength Will Drive Markets Higher - 10th July 19
Government-Pumped Student Loan Bubble Sets Up Next Financial Crisis - 10th July 19
Stock Market SPX 3000 Dream is Pushed Away: Pullback of 5-10% is Coming - 10th July 19
July 2019 GBPUSD Market Update and Outlook - 10th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Impending US Dollar Peak Should be Catalyst for Gold Price

Commodities / Gold and Silver 2015 Jan 30, 2015 - 12:47 PM GMT

By: Jordan_Roy_Byrne

Commodities

Gold has performed very well under the circumstances of declining inflation and a surging US$ index. Since 2014 the US$ index is up nearly 18% while Gold is up 3%. Since Gold's November low the US$ index is up over 10%. Had we known that at the time, we'd have thought Gold would be headed for $1000 and not the $1300 it recently hit. At present, the US$ index appears ripe for a correction or major pause in its uptrend. Given that Gold is priced in US$ and that Gold has shown strength in real terms, sustained US$ weakness could be a major boon for Gold and precious metals as a whole.


Before we get to the US$, I'd like to provide a comparison of Gold and Gold charted against foreign currencies. To create the foreign currency index we simply took US$ data and inverted it. Thus, we are charting Gold against the currency basket that comprises the US$ index. Over the past 15 years strength in Gold relative to foreign currencies has often preceded Gold strength in US$'s. Gold priced against foreign currencies bottomed in December 2013 and reached a 21-month high last week.

Gold Versus Foreign Currencies

Let's take a look at the US$ index. We plot the index and its distance from its 10, 40 and 80-week exponential moving averages. A market's distance from various moving averages can signal overbought and oversold conditions. We highlight the points at which the US$ index has been most overbought. Considering the three oscillators as a whole, the US$ index is arguably at its third most overbought point since the US$ floated in 1971. The other times were at its peak in early 1985 and during the 2008 financial crisis.

US Dollar Weekly Chart

Meanwhile, sentiment on the US$ has reached a major extreme. Public opinion charted below (from sentimentrader.com) recently hit 91% bulls. That is the highest in 15 years. We should also note that the daily sentiment index for the US$ index hit 98% bulls a few weeks ago. That is the highest reading since May 2010. The US$ peaked a month later.

US Dollar Optix

Gold has performed very well amid tremendous US$ strength and could get a further boost if and when the US$ weakens. The US$ index is extremely overbought and sentiment is extremely bullish. At the least it figures to correct or consolidate for a while. That could be Gold's chance to begin its next leg higher and force the bears to capitulate. While recent correlations have been atypical, I find it hard to believe Gold doesn't perform well if the US$ corrects. In the days and weeks ahead, the key support levels are GDX $20 and Gold $1240 to $1250.

Consider learning more about our premium service which includes a report on our top 10 juniors to buy for the coming bull market.  

Good Luck!

Email: Jordan@TheDailyGold.com
Service Link: http://thedailygold.com/premium

Bio: Jordan Roy-Byrne, CMT  is a Chartered Market Technician, a member of the Market Technicians Association and from 2010-2014 an official contributor to the CME Group, the largest futures exchange in the world. He is the publisher and editor of TheDailyGold Premium, a publication which emphaszies market timing and stock selection for the sophisticated investor.  Jordan's work has been featured in CNBC, Barrons, Financial Times Alphaville, and his editorials are regularly published in 321gold, Gold-Eagle, FinancialSense, GoldSeek, Kitco and Yahoo Finance. He is quoted regularly in Barrons. Jordan was a speaker at PDAC 2012, the largest mining conference in the world.

Jordan Roy-Byrne Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules