What Did the US Dollar Have to Do With Gold's Nov 7th Rally? / Commodities / Gold and Silver 2022

Gold, silver and mining stocks’ pricessoared on Friday. Let’s see if the dollar may have had something to do withthis movement.

Very little happened in the preciousmetals market yesterday, and what Iwrote and said yesterday remainsup-to-date.

I got a request to comment on the USDIndex (and its link withgold), and I’ll be happy to deliver.

The Flag Pattern

In short, the USD Index remains in its flag pattern that started inSeptember. A flag pattern is a continuation pattern where the price tradessideways (but slightly against the trend) and it continues… until it doesn’t.Quite often, the pattern ends after two or three bottoms. We already had two,and it seems that the third one is about to be formed or it has already formed.

The RSI is slightly below 50 and the USDX itself is a bit below its50-day moving average (blue line). In the previous months, this combination offactors meant that another sizable rally was just around the corner. As historytends to rhyme, the implications are bullish.

Since March, gold has been moving in the opposite direction to theUSD Index, so the implications of the above are bearish for gold and the restof the precious metals sector.

Why wasn’t gold moving against the USD Index in February? Because ofthe fear and uncertainty related to the Russian invasion of Ukraine. Pleasenote that the war in Ukraine is still in place, and yet, gold is hundreds of dollars below its 2022high. This serves as a strong confirmation of gold’s current weakness.

Looking at gold’s short-term picture, we see that its short-term topmight already be in.



The last two times it broke slightly above its declining medium-termresistance line, it then stayed above it for a couple of days, and then itstarted $100+ declines.

Given today’s pre-market decline, and given the overallself-similarity to how gold performed in 2013, it seems that not only theshort-term top is in, but it’s likely the case that another huge decline isabout to be seen.

A Word About Silver

Moreover, let’s keep in mind the silverprice signal.



As I explained in my yesterday’svideo, silver’s short-termoutperformance is an important sell signal.

We saw this indication many times before,and it’s been one of the most reliable indications that the next big move loweris at hand. Remember the spike at the 2021 top, when silver soared relative togold? Many people thought that silver was taking off and heading straight tothe moon, but I warned that this was likely a fake move. And indeed, that wasthe top.

There were times to be long this year(for example, I went long miners on May 12 and on July 11 – very close to localbottoms). However, in my opinion, right now is not a good time to do so.Instead, it seems to me that profits from short positions are likely to growsubstantially in the following weeks.

Today's article is asmall sample of what our subscribers enjoy on a daily basis. They know aboutboth the market changes and our trading position changes exactly when theyhappen. Apart from the above, we've also shared with them the detailed analysisof the miners and the USD Index outlook. Check more of our free articles on our website, including this one – justdrop by and have a look. Weencourage you to sign up for our daily newsletter, too - it's free and if youdon't like it, you can unsubscribe with just 2 clicks. You'll also get 7 daysof free access to our premium daily Gold & Silver Trading Alerts to get ataste of all our care. Signup for the free newsletter today!

Thank you.

Przemyslaw Radomski, CFA

Founder, Editor-in-chief

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