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Dollar strength decimating golden dreams

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Featuring views and opinions written by market professionals, not staff journalists.

Commentaries & Views

The below chart is gold on a 4-hour timeframe:

And not coincidentally, here is the DXY as a mirror image along the same timeframe:

From a daily viewpoint, the DXY hit the overhead trendline this morning. Dollar bulls want momentum to stay overbought (example shown in chart) while price breaks above the line. In that scenario, a move to 105.5 becomes the probability.

The daily gold chart below: Gold might be in for a hard ride to $1850 with momentum flatlined on the way down. Bulls have failed to recapture the 200-DMA just this morning; prices are also failing to hold the June lows this week.

Of course, the first warning shot was the weekly close below $1935.

It now looks like stackers will have an opportunity to get in even cheaper in the days/weeks ahead while bullish sentiment is crushed. I do not think gold is never going up again, but a wash-out now seems even more likely before another move-up.

Thanks, and good luck.

By

Jonathan Da Silva

Contributing to kitco.com

Contact jdasilva@kitco.com
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.