Gold Market Wire
News, analysis and commentary for gold traders and investors
US Dollar Bounces off Friday's Support
February 22, 2021 - (Gold Market Wire) - The US Dollar (vs. Eur) support at 1.2150 performed its magic yet again, as the market came within a few pips and promptly rallied again. This morning we have put in an early high of 1.2105. (readers remember: inverted chart; i.e. lower price equals stronger Dollar) Right now the chart is painting a fairly favourable picture for the US Dollar - much, as we are sure, to the consternation of the wide sea of Dollar bears.
The top of our channel is looking like a significant impediment to the Dollar falling and so we remain US Dollar long against the Euro, and will add at this junture. The Euro looks ready for another lurch down, and its hard to argue with all the technical considerations, i.e. the channel top, the horizontal failure at 1.2150, and the general Dollar strength. We're sticking with the trend, and that trend is as clear as can be - within the channel.
Gold, as we have opined of late, seems to have taken the Dollar advance well. True, the meandering around $1850 has given way to a meandering around $1800, but our bounce of $1760 had the tone of strength in it. As we are at pains to re-iterate, the days of the "inverse correlation" (i.e. Dollar vs. Gold) trade may not be as numerous as many think. The Dollar looks prepared to rally and Gold is hanging in there, putting in a solid performance in the Asian market this morning. Now for the tough part:
So Gold has some work cut out for it this European a.m. $1796.50 is our horizontal marker this morning. We have touched it. Let's see if we can better it.
Our favourite market - the Gold/Silver ratio has already put in a solid performance this morning, although its backing off now to an unchanged position. We've had a lot of bounces off of 65.00, and we really need to get through that level to continue to work lower. Those who have the position on can lighten up a bit, and wait to see how the challenge plays out. No doubt about it... the area is providing support. The ratio has had a significant downmove, and, even though indicating a reveral to lower levels, might pause and retrace for a while. It been all Silver for weeks now. Perhaps Gold is preparing alittle show of its own.
We have little doubt that Silver will be the star performer of the Metals market this year...but nothing moves in a straight line. Having said that, if we get a weekly close below 64.75, we could be on the way back down. Investors should be happy to run the short, or add to it if we rally.