Despite the dollar steam rolling higher, the negative divergence in price versus relative strength on the weekly timeframe, continues to grow. The chart below has been updated to highlight that divergence. The chart also displays how the DXY began it’s ascent in August of last year.
Now gold on the weekly chart over the same span of time:
As of now, gold bulls have held long-term support directly in the face of one of strongest USD rallies experienced in decades; a sign of strength. In parallel, sentiment for metals remains in the dump and calls for $1,300 gold have begun popping up. Could a cascade down to the $1,530 area occur with a breach of the $1670 -75 level? Absolutely. In this traders opinion, evidence suggests it would take a market in belief that the DXY is on its way to 120, and a FED more hawkish than is currently expected, for that to occur.
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