Precious metals took it on the chin Wednesday as DXY bounced

Barcelona-SPAIN (July 25)  Gold  is treading water early Thursday after correcting sharply off of Wednesday’s peak of 1,348.70. More DXY-moving data due out in the US Thursday.

The metals had completed five waves higher and were due for a pullback

Gold and silver pulled back sharply Wednesday in reaction to an oversold bounce in the DXY and to a short-term overbought condition of its own. Better economic news out of the US Wednesday pushed the yield on the 10-year Treasury Note higher and gave the DXY a much-needed boost. That change in direction led to another change of direction in the gold and silver markets with gold tumbling by over 1.5% to $1,320 and silver falling 1% to $20.

Technical outlook for the DXY

“While more upside is likely in the precious metals arena, a short-term pullback should play out first” said Tim Thielen, CMT and author of The Sea Change Report Thielen is calling for gold to move down to either 1,309 or 1,248 – depending heavily on what transpires short-term with US interest rates and the DXY. Short-term resistance for gold comes in at the Wednesday high of 1,348.70 and is followed by the early-June peak and Fibonacci retracement (of the October to June decline) level of 1,418.42. Short-term support for DXY comes in at the first two Fibonacci retracement (of the recent rally) support levels of 1,309 and 1,284.