On The Verge Of USDX And PM Sector Pause

October 14, 2020
CFA, Editor & Founder @ Sunshine Profits

In Monday’s analysis , we’ve explained why rising stock prices might not lead to significantly higher gold prices after all before the latter turned south again. The manner in which this week’s trading was conducted seems to have confirmed our indications. With stocks ( S&P 500 ) up by 1%, and Monday’s close as its second-highest daily close this index has made – ever, did gold rallied that strongly as well? Not by any means. As a matter of fact, gold futures went down by 1.64% ($31.60).

This relative performance is a bearish indication, but it’s not as bearish as the fact that gold has just invalidated its small breakout above the declining resistance line.

At the same time, this means that:

  • Gold invalidated its small short-term breakout. However, the breakdown below the rising medium-term support line was not invalidated.
  • Silver declined after verifying its breakdown below the rising medium-term support line.
  • Miners are already well after the critical breakdown below the rising medium-term support line.

It all happened while stocks moved close to their all-time highs. Clearly, the rising stocks won’t be able to push the precious metals sector higher on their own.

In most cases, the most significant signs come from the USD Index, presented on the multi-chart above. However, to check what comes next for the U.S. currency in the near future, we’ll have to zoom in.

If we look at the index from a very short-term perspective (the chart above is based on 4-hour candlesticks), we can see that the USD Index just broke above its short-term resistance line and is currently verifying this breakout.

This means that while we might see a pause in both: USDX and the precious metals sector in the next several hours (or few days), more decisive moves are likely to follow then. By all means, in case of the USDX, this move is likely to be an upward one, and in case of the PMs, it will most probably be towards the downside.

Thank you for reading our free analysis today. Please note that the following is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the interim target for gold that could be reached in the next few weeks.

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Przemyslaw Radomski, CFA
Editor-in-chief, Gold & Silver Fund Manager
Sunshine Profits: Analysis. Care. Profits.

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All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

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Przemyslaw Radomski, CFA, is the founder, owner and the main editor of SunshineProfits.com.  You can reach Przemyslaw at: http://www.sunshineprofits.com/help/contact-us/.

 

Minting of gold in the U.S. stopped in 1933, during the Great Depression.

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