{"id":114448,"date":"2017-10-09T14:21:34","date_gmt":"2017-10-09T18:21:34","guid":{"rendered":"http:\/\/countingpips.com\/?p=114448"},"modified":"2017-10-09T14:21:34","modified_gmt":"2017-10-09T18:21:34","slug":"are-gold-and-the-dollar-rallying-together","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2017\/10\/are-gold-and-the-dollar-rallying-together\/","title":{"rendered":"Are Gold and the Dollar Rallying Together?"},"content":{"rendered":"
October 9, 2017<\/div>
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By The Gold Report<\/b><\/p>\n

Source: Clive Maund for Streetwise Reports<\/em> \u00a0\u00a010\/08\/2017<\/a><\/b><\/p>\n

Technical analyst Clive Maund examines the relationship between the dollar and precious metals.<\/p>\n

The last gold Market update almost a month ago called the intermediate top within a day, as you may recall, and the subsequent Gold and U.S. Dollar <\/a>
\ncalled the rally in the dollar the day before it started. Having seen a
\nsignificant reaction back by gold, the question now is “Has it run its
\ncourse?” The short answer to that is yes, although calling a bottom here
\nis complicated by the fact that gold’s COTs have not eased as much on
\nthe reaction as we might have expected, and the dollar Hedgers’ chart is
\nstill flat out bullish for the dollar. What this means is that we may
\nneed to see some bottoming action by gold, even if it soon breaks out of
\nits rather steep short-term downtrend, and another possibility that we
\nwill examine is that the dollar and gold rally in tandem, a rare
\ncircumstance that could be occasioned by an extreme development such as
\nan attack on North Korea, although if this happens the peoples of Seoul
\nand Tokyo will doubtless have more important things to think about than
\nthe price of gold.<\/p>\n

On gold’s latest 6-month chart we can see how the reaction of recent
\nweeks has retraced about 50% of the prior rally, as tensions with North
\nKorea have temporarily eased. This reaction has more than fully
\ncorrected the overbought condition resulting from the rally, and has
\nbrought gold back into a zone of significant support just above its
\nrising 200-day moving average, and with moving averages in bullish
\nalignment, conditions generally favor a reversal and rally. The
\n“spinning top” candlestick that occurred on Friday on increased volume
\nmay mark the turn, although the candlesticks that occurred on the charts
\nfor silver and silver proxies look like more convincing reversals.<\/p>\n

<\/center>
\nAn important factor having a bearing on the outlook for the precious
\nmetals was the nice reversal in copper on Thursday after a significant
\nreaction, with it gaining nearly 3%…<\/p>\n

<\/center>
\nGiven that copper tends to lead other metals as it did on the last
\nrally, this could well be followed by gold and silver reversing to the
\nupside after their reaction back to support, despite the dollar looking
\nlike it has further to rally. Another positive factor for gold and
\nsilver is that there was a full moon late last week and the Precious
\nMetals often reverse on either the new or full moon, although
\nastrologically silver is ruled by the moon and gold by the sun, which
\nmay explain why the Incas, famous for their gold, worshiped the sun \u0096
\nwhich makes a lot more sense than many of the other things that get
\nworshiped. If you think that is wacky, try this for size\u0097eclipses are
\nthought by many astrologers to be a baleful omen, and you may recall
\nthat on August 21st a total eclipse of the sun slashed right across the
\nU.S. from coast to coast. Soon after, the country was clobbered by a
\nsuccession of natural disasters, in addition to Donald Trump\u0092s
\nTweetstorms, with three massively destructive hurricanes impacting Texas,
\nthen Florida, and lastly Puerto Rico. Coincidence? I think not.<\/p>\n

On gold’s 8-year chart it continues to look like it is in the late
\nstages of a giant Head-and-Shoulders bottom pattern. The buildup in
\nvolume over past 20 months certainly looks positive, especially over the
\npast several months, all the more so because it has driven volume
\nindicators higher, notably the Accum-Distrib line, which is not far off
\nmaking new highs\u0097exceeding its level at the 2011 peak. Once gold
\nbreaks above the resistance level approaching $1400 it will be on its
\nway, although it will then have to contend another important band of
\nresistance in the $1510 – $1560 range.<\/p>

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<\/center>The latest COT chart for gold shows that, while positions have certainly
\neased on the reaction of recent weeks, they have not eased by as much
\nas one would expect, which sounds a cautionary note and suggests that a
\nrally now may be stunted, and followed by more basing action before a
\nlarger uptrend can gain traction. This accords with what we are seeing
\non the dollar charts, especially the latest dollar Hedgers’ chart.<\/p>\n

<\/a><\/center>Click on chart to popup a larger, clearer version.<\/p>\n

The Market Vectors Gold Miners, GDX, which functions as a gold stocks
\nindex, is marking out a giant Head-and-Shoulders bottom that roughly
\nparallels the one completing in gold itself. The fact that the price is
\nstill well below the strong resistance at the top of this reversal
\npattern means that prices for many gold (and silver) stocks are still
\nvery favorable. The volume pattern during the build out of this base
\npattern is very bullish, with big volume on the rise out of the low
\n(Head) of the pattern, tailing off steadily as the Right Shoulder has
\nformed.<\/p>\n

<\/center>The dollar looks like it has put in an intermediate bottom. On the
\n1-year dollar index chart shown below, we can see that it has broken out
\nof its downtrend by a significant margin and looks like it may be
\nmarking out a Head-and-Shoulders bottom, although it is still too early
\nto be sure. If it is then we will see a shallow dip to mark out the
\nRight Shoulder of the pattern before it then turns higher.<\/p>\n

<\/center>
\nThe latest dollar Hedgers’ chart certainly looks bullish, with the large
\nCommercial Hedgers having cleared out their short positions\u0085<\/p>\n

<\/a><\/center>Click on chart to popup a larger, clearer version.<\/p>\n

Chart courtesy of www.sentimentrader.com<\/i><\/p>\n

Although we cannot reconcile this positive dollar outlook for the
\nmedium-term (long-term outlook remains bearish) with a positive outlook
\nfor the precious metals sector, there are times when the dollar and gold
\nand silver rally together. This could happen for example if some
\ndrastic action is taken with respect to North Korea.<\/p>\n

Clive Maund<\/i><\/a> has been president of www.clivemaund.com, a successful resource sector website, since its inception in 2003. He has 30 years’ experience in technical analysis and has worked for banks, commodity brokers and stockbrokers in the City of London. He holds a Diploma in Technical Analysis from the UK Society of Technical Analysts.<\/p>\n

Want to read more Gold Report<\/i> articles like this? Sign up at www.streetwisereports.com\/get-news<\/a> for our free e-newsletter, and you’ll learn when new articles have been published. To see recent articles with industry analysts and commentators, visit our Streetwise Interviews<\/a> page.<\/p>\n

Disclosure:<\/b>
\n1) Statements and opinions expressed are the opinions of Clive Maund and not of Streetwise Reports or its officers. Clive Maund is wholly responsible for the validity of the statements. Streetwise Reports was not involved in the content preparation. Clive Maund was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
\n2) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer<\/a>. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.<\/p>\n

Charts provided by the author.<\/p>\n

\"\"<\/p>\n","protected":false},"excerpt":{"rendered":"

By The Gold Report Source: Clive Maund for Streetwise Reports \u00a0\u00a010\/08\/2017 Technical analyst Clive Maund examines the relationship between the dollar and precious metals. The last gold Market update almost a month ago called the intermediate top within a day, as you may recall, and the subsequent Gold and U.S. Dollar called the rally in […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-114448","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/114448","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=114448"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/114448\/revisions"}],"predecessor-version":[{"id":114455,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/114448\/revisions\/114455"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=114448"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=114448"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=114448"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}