The government shutdown is once again in the news, and gold is apparently capitalizing from it.
Shutdown Drama Fuels Gold
It’s all smoke and mirrors as those making the decisions will not cut funding for themselves. It’s just the politicians pretending that they care about the fiscal discipline – which I completely don’t believe in.
But the market appears to be moving on this political theater, and gold is up. Silver not so much (today – it could rally more in the upcoming days as it’s so close to its all-time highs).
Gold rallied once again, and it’s now moving closer to the Fibonacci-extension-based target of $3,900.
Will it top here?
It seems to me that it will top when it’s clear that the USD Index is indeed rallying. But when will that be? Given USD Index’s technical picture, it can happen any day or hour now. Taking only the gold’s technical picture into account, it looks like the $3,900 level provides a nearest realistic target level.
The USDX pulled back after its short-term breakout, which changes nothing. It seems more than likely that the USD Index will finally soar in the following weeks.
History Repeats: Metals React Late
Let’s keep in mind that gold, silver, and miners used to decline only once the rally in the USD Index was clear. Right now, the USDX seems to be moving back and forth, even though its short- and medium-term breakouts are clear.
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