US Dollar Gold Trend Analysis / Commodities / Gold & Silver 2019
The following chart illustrates that there is a strong inverse relationship between the US Dollar and Gold. When the Dollar rises, the gold price tends to fall and visa versa, it should not be surprising given that the Gold is priced in dollars. The only recent deviation from the correlation was October to December which coincided with stock market weakness i.e. SAFEHAVEN buying of the Dollar AND Gold. So the safe haven buying that gold bugs obsess over tends to be temporary at times of stock market stress.
The recent trend in the gold price has been shallower than the expected given that the USD has continued to march higher which implies relative strength, i.e. the gold price appears to want to go higher despite the rising dollar.
A quick technical take suggests that the US Dollar may be running out of steam as it approaches resistance at $100, from where a correction could see a retracement to $95, a trend towards which would likely be the trigger for the Gold price to assault resistance at $1350.
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Nadeem Walayat
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Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.
Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk
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