January 22, 2021 - (Gold Market Wire) - When we talk about the US Dollar, some like to look at the USDX, or, Dollar Index. We don't use it. It's a skewed, water-downed representation of the true FX pairing that matters - The EUR/USD. That is our start and end point for measuring the Dollar's strength (and weakness). Right now, the Dollar rally has continued to surprise the majority of the market participants, but the bounce is on, and we are drifting back towards 1.22. The dollar is retracing, giving Dollar bears some comfort, that this was just and inside Dollar rally and the fall will re-commence. The chart lays of the history.

The 50-day moving average has held, and that is a Euro positive. So, with the Dollar resuming a downward posture, this should be music to the Gold Bull's ears. But it isn't. Gold is getting hit today. it is moving with the Dollar, not against it. As we have been at pains to say - the "inverse monetary proxy theory" isn't working, and really hasn't been working for some time. For the Dollar bulls, whose favourite pastime is trashing the US Dollar, the may wish to take note. This is no anomoly. In fact it is happening with ever greater frequency. The Chart:

The 50-day moving average is in the dust and our preferred marker, $1850, is getting challenged. Gold really needs to hold $1850 on today's close. The environment is choppy and difficult to trade....no doubt. We remain bullish on Gold and the US Dollar in the medium term. The short term is a mess, however. Without a sizeable move, we are going to finish the month out below last month's high... not a good sign. Right now we are mid-stream and focused on $1850.

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Meanwhile: we are finally getting a sell-off in Wheat, and are waiting to take fresh length for the trading book. We are firm believers that agriculture is still just beginning a multi-year bull market.

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