Gold Market Wire
News, analysis and commentary for gold traders and investors
Gold Market Update
US Dollar Rally Cuts Gold's Rally
February 10, 2023 - (Gold Market Wire) - The turn around in the US Dollar has dented Gold's move up as interest rates appear ready to stay elevated. We've taken on a good 3% on the EUR/USD diff, and the market looks ready to move lower (i.e. - USD stronger.) If we move back below the trend line (above) Gold could get hurt again.
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We've got some poorly positioned length above the market, but we are going to wait and see if the USD pulls back a bit before chooping it. As for the new core positions, they are staying in place. We are increasingly facing a conundrum: Gold could just settle into a bland trading pattern - doing very little, but all the while acting as the hedge against a banking crisis. That means that the insurance aspect is more necessary than ever (in physical) but the trading arena could be "challenging", for want of a better word.
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But let's look at our big picture theme - the one we have held for a couple of years+ now; i.e. "long dollar/long Gold". We're about 13% higher on Gold and about 9% offside on fx. ... or net 4% in 3 months/16% per annum.
Could be worse.
Going forward we are still bulish the Dollar, as the European position is simply disastrous. If we lose the 50-day mov.ave. on Gold, we are going to start scaling back and taking some loses on the recent position, while holding strong to the US Dollar. Ultimately a higher weightin in US Dollar's is where we will need to be.