Gold Market Wire
News, analysis and commentary for gold traders and investors
Gold Market Update
Gold Feels the Heat
January 27, 2021 - (Gold Market Wire) - Gold is coming under pressure this morning, leaving the 50-day moving average firmly in the rear-view mirror and breaking the first (minor power) uptrend line. The chart lays it out:
As we said yesterday, Gold needed to get a move on - or face another down move. Now we have it. The 'culprit', as usual, is none other than the EUR/USD, which is taking on ever more strength, and looking ready to run again.
The Dollar looks set to move higher. Although only a few cents above, that high at 1.235 now looks like a long way away. Horizontal support is coming in at 1.2071 and we would expect that to be challenged soon.
So, like it or not, the Gold "Perma Bulls" are feeling the heat. They seem locked into "Uni-Vision", as they cannot shift with the market and cannot, ever, concede that the US Dollar may actually be beginning a significant rally. That is their Achilles heel. Does that signal the end of Gold's upside? Not at all. It merely means there is a better entry point ahead. If you use margin, you need to optimize the entry point - or you'll be forced out of the market.
Meanwhile: As we continue to re-iterate... What is exactly, trending against the rising Dollar? Of, course, none other than our favoured investment and trading vehicle, established some three months ago, and likely to run for years - AGRICULTURE. Wheat has taken the Dollar rally as an opportunity to back and fill, and is now charging again.
We recommended "reloading" the length in the trading book last week, and it has paid off. We will be watching, very closely, to see agriculture's reaction to any Dollar rally, to see if it retraces in the face of a stronger Dollar, but, so far, the message is clear - a rising Dollar is no impediment to higher food prices. If the market doesn't come down on in the face of a Dollar rally in the next few days, it is going to signal another up move. Core positions should be added to.
Likewise, our old favourite: Corn
Ag is on fire...and that is not going to end any time soon.