It appears we are close to another tipping point in the DXY / Gold correlation.
The dollar has finally broken below its intermediate cycle trend and is gathering steam in a capitulation draw down based in large part on the recent political turmoil. Last year the yearly cycle low occurred in early May. In the next few days we may see a cycle low in the dollar that could be followed by a multi-month rally on the dollar through the end of the summer.
The above chart illustrates the correlation of gold with the dollar, and based on historical trends, it could spell short term trouble for those of you invested in the miners. Many of you may believe the the dollar will continue to fall for a few more months, but that seems to run against the historical patterns. Be wary of a bottom in the dollar by the end of May.
Trade with caution because it is always dangerous when you assume that “It’s different this time”.
The dollar has finally broken below its intermediate cycle trend and is gathering steam in a capitulation draw down based in large part on the recent political turmoil. Last year the yearly cycle low occurred in early May. In the next few days we may see a cycle low in the dollar that could be followed by a multi-month rally on the dollar through the end of the summer.
The above chart illustrates the correlation of gold with the dollar, and based on historical trends, it could spell short term trouble for those of you invested in the miners. Many of you may believe the the dollar will continue to fall for a few more months, but that seems to run against the historical patterns. Be wary of a bottom in the dollar by the end of May.
Trade with caution because it is always dangerous when you assume that “It’s different this time”.