When the U.S. Dollar is strong, it is a headwind for precious metals. And when the U.S. Dollar is weak, it is a tailwind for precious metals.

Today we check in on this relationship by looking at a “weekly” chart of the U.S. Dollar versus the Gold Miners ETF (GDX) and Gold ETF (GLD). And we highlight why this relationship may be at a critical inflection point.

“The facts, Ma’am. Just the facts” – Joe Friday

Looking at the chart, we can see that King Dollar has produced lower highs for the past 9 months and could be putting in another lower high as it tests its 23% fibonacci level at (1).

Looking at the relationship, continued weakness in the U.S. Dollar would be great for Gold, the Gold Miners, and precious metals in general. You can see the uptrends in GLD and GDX as the U.S. Dollar has been in its recent downtrend.

Seems like U.S. Dollar weakness at (1) would be great news for GLD and GDX… while strength would be bad news. Seems like an important time for this relationship.

(Click on image to enlarge)

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