opinion

Gold to keep shining? US Dollar dive a tailwind for stocks, too.

Kitco Media
By Jonathan Da Silva
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Gold to keep shining? US Dollar dive a tailwind for stocks, too. teaser image

A couple of weeks ago, I showed a chart of the U.S. Dollar index, suggesting a rhyme on winter 2022/2023 looked set for winter 2023/2024.

Below is that weekly updated chart. The blue zone demarcates last winter. To me the most plausible point for the DXY to get relief is the bottom end of the Bollinger band at 100.9/101, approximately.

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Stocks? It's no surprise the S&P is continuing its rise. Certainly, a weaker USD is a tailwind for U.S. stocks. The question is, can stocks withstand even a strengthening USD? Especially if the narrative remains that the economy is more resilient than expected (pleasantly so, according to Jerome Powell) in the face of what the FED describes as aggressive action.

Regardless, according to the weekly chart below (shown again), there is still no reason to sell, in my opinion.

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Last week, I mentioned a best-case scenario for bulls: a move to $2070 should an upside breach of $2010 occur. Of course, a $40 move to $2050 very quickly proceeded the breach over $2010. I have no reason to doubt that a test of $2070 will yet occur, but that may take until Christmas. I may revise my timeframe on a move to $2070 should gold bulls hold the price outside the upper Bollinger band.

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Thanks, and good luck

Kitco Media

Jonathan Da Silva

Jonathan Da Silva developed a passion for hard money and economics from a young age having been influenced by family who sought to teach me that "nothing is free", and the importance of intrinsic value early on. My interest in markets grew keener during the great financial crisis of 2008; leaning on family with vast trading experience, I began to self-educate on technical analysis and economics- drawing inspiration from the works of individuals like W.D. Gann and Adam Smith. I have been a proud member of the Kitco team since 2017 and hope that my writing inspires readers to consider an objective view of the metals, and the greater financial markets.

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