Gold Market Wire
News, analysis and commentary for gold traders and investors
US Dollar Seeks Next Leg in Rally
January 13, 2020 - (Gold Market Wire) - The US Dollar is knocking on the door of the next leg in its recent rally. The chart below lays out resistance. (Remember its an fx chart, quoted EUR/USD, so Dollar rallies mean graphic declines).
Right now, the Dollar rally is starting to gain some momentum. A move to break the resistance and challenge to 50-day moving average is not out of the question, at all... in fact it looks ever more likely.
How Gold will react to that will be the $64k question, as the infamous correlation trade is examined yet again. Long Dollar and long Gold may be the trade as we enter the showdown. Weighting that "diff" should be lighter to the Gold side. We could see the Dollar continue its rally while Gold stalls out and goes flat. The risk is that the Gold market takes flight at the first sight of a further Dollar rally, but a weighted USD position should balance that. Wht also must be remembered is that a weaker US Dollar was a big part of what got stocks so frothy. If the stronger Dollar cause the stock markket to reverse - it is likely that Gold will get caught up in the carnage.
A lot to consider in these chaotic times.