The Dollar And Gold: The New Normal?

December 3, 2014

I am not sure what to make of the U.S. Dollar (DXY) vs Spot GOLD relationship recently, because it has certainly been counter-intuitive, not to mention counter-historical.

It is unusual to have such a strong Dollar concurrent with such a resilient Gold price.

That said, the relationship is not counter-seasonal, however.

When the Dollar has a pronounced direction heading into Dec, it usually continues into year end, while Dec usually resides within the seasonally-strong Nov-Mar time period for GOLD.

Be that as it may, the multi-month DXY uptrend is considerably more powerful than the budding GOLD recovery rally, at this point, GOLD must climb and sustain above heavy resistance at $1255/60 to trigger any meaningful upside traction.

Bottom Line: My suspicion is that the strong Dollar is approaching a peak in and around 90.00, and that an oversold, under-owned, gold market is ripe for a recovery rally at a minimum, and a surprisingly strong up-move, if, in fact, the Dollar is peaking.

daily dollar ondex

Mike Paulenoff is author of www.MPTrader.com, a real-time diary of his technical analysis & trade alerts on ETFs for precious metals, energy, currencies, and an array of equity indices and sectors, including international markets, plus key ETF component stocks in sectors like technology, mining, and banking. Sign up for a Free 15-day Trial!

78 percent of the yearly gold supply--is made into jewelry.

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