January 18, 2020 - (Gold Market Wire) - The scenario we laid out last weak, of a US Dollar ready to challenge resistance, and Gold being caught in the cross-hairs, came to fruition. We recommended the sidelines, as Gold was about to take a shot to the head, as it did. Right now, the US Dollar, much to the consternation of the Gold Bulls and the "Dollar is Finished!" crowd, is looking strong, and is likely to get stronger. No one is bigger than the market! Ever.

While we are not wedded to the Dollar/Gold correlation trade - this one was easier to see than most, for a very simple reason. The US Dollar was about to reverse from nearly 10-months of battering, and, when combined with some sort of 'closure' on the US Presidential election, the stage was set fairly neatly, along with the technicals, for a reversal. Our opinion is that the US Dollar rally has more room in it... as in weeks and months of room. That double top at 1.235 has the air of a true reversal of fortunes, and we must respect it until proven otherwise.

As the Dollar bolted out of the starting gate, Gold took cover. Is that the end for Gold's recent run? Probably not. We are relatively sanguine about it, but are more inclined to take a wait and see approach. Right now, the a.m. chart looks like a lot of people have been flushed out, and that there is solid buying interest at lower levels.

Despite that, however, the infamous $1850 level, plainly a marker of horizontal importance, is in the dust. Without a recovery for a close (weekly) above it, we can see little reason to be long. Spec shorts may want to try a short here. There is a lot of wind at the back for Gold bears, with the US Dollar, right now.

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Meanwhile: Guess what hasn't fallen along with a rising dollar? That's right Wheat...

and Corn:

The agriculture markets are on fire, and they are going to stay on fire for quite some time. If it's upside action you seek - this is where it's at.

Gold looks paltry by comparison. Sorry Bugs - that is just the simple truth.