News, analysis and commentary for gold traders and investors

"Be Right - Sit Tight"

Jesse Livermore
Subscribe to receive our market report service:
Market Info
Feature coming soon.
Thank you for your patience

Gold Market Wire

News, analysis and commentary for gold traders and investors

Gold Market Update

US Dollar Settles Down...and Gold Starts to Move Higher

November 26, 2021 - (Gold Market Wire) - The choppiness and volatility in the Precious Metals arena looks likely to be a new feature. After a slightly dull third quarter, where the Gold spent a ton of time meandering, mostly within an $80 range, now volatility is picking up. There is a solid reason for this, which can be discerned behind the cacophony, if we just look closer.

It would appear that we may be beginning a new juncture in the metals market where the US dollar surges, causing Gold and Silver to back off, sometimes sharply, like we have just seen, which is then followed by the currencies calming down and the Metals catching back up. Could it be that today is starting to intimate just this?

the moving averages have held.

On the Gold side, a sudden waterfall, but the trend line held. This was a washout without a follow through. Contrast the choppiness in Gold (Dollar Based), whose uptrend is still in tact with the EUR/USD chart, which is a true nightmare to behold.

no 'choppiness' at all, just a pulverising sell-off.

And here we have the proto-type, in chart formation, of what a US Dollar Rally alongside a Gold rally starts to really look like. The US dollar surges, the Metals pull back and then start to rise again.

Let's wind back to a previous inflection point in the markets, near the EUR/USD highs in late May, and then compare it with some six months later. Here's just a simple mathematical map of the relationships between the two markets - taken as a pair of snapshots.

May 25 - 1.2250

May 25 - $1885.00

Nov. 17 - 1.1300

Nov 17 - $1860

So, while the US dollar surged some 8% (on a differential basis!), Gold shed only about 1.5% in the corresponding time Frame. Outrights move a lot more than 'diffs', for obvious mathematical reasons (fx diffs don't go to zero ... ok, Turkish Lira excluded). So, the obvious point is that the US Dollar surged, while Gold did little or nothing. And, yes, Gold did play 'catch up' for a part of the move soon after by falling lower, but it is now starting to rise again. It takes no genius to see the change in the relationships. Gold is not falling with a rising Dollar to any significant extent. That is a marked difference with how Gold reacted in the 2012-2017 period, and this is the basis of our belief that Gold and the US dollar will start to rise together... and why we believe a long US Dollar position, and a nimble trading position, from the long side, in Precious Metals is the proper stance. Of course, this could simply be illustrated by using a Gold/EUR chart, but most of the world doesn't look at the market that way, so by separating it out into two charts and implying the third, we can see what the market is doing in a fashion that suits the trading community. The US dollar is NOT finished, the way the Goldbugs say. And neither is Gold!

They are holding hands together as the run for the Cliff edge of the present Monetary system.

< Previous articleHome pageNext article >
<- Go Back