Gold Seeks Direction As US Dollar Index Slips

Gold Seeks Direction As US Dollar Index Slips

As of Wednesday (Dec. 30) morning, gold is range trading and remains more or less flat as it seeks momentum. As we wait for the precious metals to act on a catalyst, let’s also take a look at the Euro’s relation to the US Dollar and how both impact gold. 

Gold Doesn't React To The US Dollar Index Slipping

Over the last 24 hours, the precious metals market did more or less nothing, despite the new daily decline in the US Dollar Index. The latter is now testing its monthly and yearly lows, while the PMs are not. PMs – as a group – are not reacting to what should make them rally, and this is yet another bearish sign for the precious metals market.

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GLD

Figure 1 - US Dollar Index (Sept-Dec 2020)

The USDX is at its monthly and yearly lows and at the same time…

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GLD

Figure 2 - COMEX Gold Futures (Jan–Dec 2020)

Gold is about $30 below its monthly high and about $200 below the yearly low.

After a temporary breakout, gold is back below its 2011 high. The breakout above the latter was clearly invalidated.

(Click on image to enlarge)

GLD

Figure 3 - COMEX Silver Futures (Jan–Dec 2020)

Silver is not even close to its 2011 high, and while it’s relatively strong compared to gold and miners on a short-term basis, it’s not at its December high right now. It’s also a few dollars below its yearly high.

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Gold US Dollar

Figure 4 - GDX VanEck Vectors Gold Miners ETF (Feb–Dec 2020)

Miners Remain Quiet

Miners remained relatively quiet on Tuesday (Dec. 29).

We see that the GDX ETF moved lower once again despite the intraday attempt to rally. During Monday’s (Dec. 28) session, miners once again moved back to their 50-day moving average and… Once again verified it as resistance. The implications are bearish.

Let’s get back to silver once again. On its chart, you can see a triangle-vertex-based reversal at the end of the year. Before the price moves close to the reversal, it’s relatively unclear what kind of implications a given reversal is likely to have. Well, including today’s (Dec. 30) session, there remain only two sessions until the end of the year, so we’re likely to see the reversal shortly.

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