Gold News

Dollar Bullish, Gold Not

One view of the current trends in currencies and precious metals...
 
WE'VE BEEN bullish the US Dollar and bearish the Euro, Canada Dollar and Aussie Dollar for quite some time now, most often using a simple weekly chart of various currencies, writes Gary Tanashian in his Notes from the Rabbit Hole.
 
Months ago we noted USD creeping out of its downtrend and the Euro falling out of its wedge. Back then, sentiment toward the USD was far different than it is today.
 
Also of note, while a USD reversal could trigger bounces in commodities and precious metals, these items generally remain bearish until proven otherwise. Not the other way around.
 
 
Now everyone knows the USD is bullish and the Euro is going to hell in a hand basket. As long as faith in paper currencies in general remains intact, I think that will be the trend. But USD is over bought to a degree that we could actually see a significant – if temporary – reversal of these trends.
 
That could wake up the various commodity sectors and probably put some life in the gold sector (led by silver) as well. At this point we are still chasing moving targets and so this is just forward-looking speculation. But the degree to which Uncle Buck is over bought seems to be impulsive enough to prompt a strong response in the other direction if things turn around in the coming weeks.

Gary Tanashian successfully owned and operated a progressive medical component manufacturing company for 21 years, through various economic cycles. This experience gave Gary an understanding of and appreciation for global macroeconomics as it relates to individual markets and sectors. Along the way, Gary developed an almost geek-like interest in technical analysis (TA), to add to a long-time interest in human psychology. Various unique macro market ratio indicators were also added to the mix, with the result being a financial market newsletter, Notes From the Rabbit Hole (NFTRH) that combines these attributes.

See the full archive of Gary Tanashian.

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