Extreme dollar weakness today overcomes sel
ling pressure in gold:

103.80 was and continues to remain an important price level of technical resistance for the U.S. dollar index. The dollar index has flirted with this price point on three occasions, first occurring at the end of 2016 and then again during the first quarter of 2017.

According to Investopedia, the U.S. dollar index (USDX) measures the value of the U.S. dollar relative to a basket of foreign currencies. The USDX was established by the Federal Reserve in 1973 after the dissolution of the Bretton Woods agreement. The index measures dollar strength or weakness against six primary currencies and was updated in 1999.

The chart above is a weekly Japanese candlestick chart of the dollar index. It begins at the end of 2016, with the dollar rising to a high just shy of 103.80. This is the first occurrence of dollar strength resulting in the index trading over 100 since the end of 2002.

This can be seen in a monthly Japanese candlestick chart of the dollar index below (chart 2). What followed after the dollar surged past 100 at the end of 2016 was a dramatic decline in value from 103.779 to a low of 88.08 during the first quarter of 2018. This represents a price decline of 16% during that year. From 2018 to the first quarter of 2020, the dollar index increased in value until it reached approximately 104, the second occurrence of the index reaching this level and then declining significantly immediately thereafter.

At the beginning of 2021, the dollar had fallen to approximately 89 before finding technical support and resuming a multi-year climb to a higher value. Dollar strength continued and breached this significant technical level 2 weeks ago. The dollar index traded to just above 105 during the week beginning May 9. However, last week the dollar index opened at approximately 104.70 and closed at approximately 103.20. Today the dollar index continued to spiral to lower pricing losing 1.04%. As of 4:55 PM EDT, the dollar index is currently fixed at 102.105.

The decline in the U.S. dollar over the last two weeks has given gold significant tailwinds moving the precious yellow metal higher. Gold futures basis the most active June 2022 contract is currently up $9.90 or 0.54% and fixed at $1852. Gains in gold value today were 100% the result of dollar weakness in conjunction with selling pressure from market participants. The screenprint of the Kitco Gold Index above was taken at 4:12 PM EDT and shows spot gold fixed at $1853, a net gain of $6.30. On closer inspection, dollar weakness contributed $17.20 in gains while selling pressure resulted in a decline of $10.90.
 

By Gary Wagner

Contributing to kitco.com

Time to buy Gold and Silver on the dips

Tim Moseley

Gold's big $1,800 test on the radar next week as stocks' steep selloff intensifies

With the U.S. stock market still at risk, should gold be trading higher? Analysts see next week as an important test for gold as markets debate the effects of the Federal Reserve's oversized hikes.

Gold is ending the week with its first weekly gain in five weeks as the precious metal finally saw renewed safe-haven demand on concerns over inflation and economic growth. June Comex gold futures were last trading at $1,841.40, up 1.8% on the week.

Going into next week, the steep selloff in the equity space might not be over as the S&P 500 is now 20% below its all-time highs posted in January.

"During the last few weeks, we saw the stock market selling off and gold going along with it. But then we got a short-term peak in Treasury yields, which opened the door for gold to behave as a safe haven," OANDA senior market analyst Edward Moya told Kitco News. "The U.S. stock market is still at risk. We could see one last major plunge. And we'll probably see gold's safe-haven [properties] being tested once more. Selling exhaustion should be settling soon."

Markets are concerned whether inflation and growth can react quickly enough to the Fed's interest rate hikes, said CIBC World Markets chief economist Avery Shenfeld.

If that is not the case, the Fed would be forced to step up its already aggressive tightening schedule, Shenfeld noted. "That's the one-two punch that the equity market is now fretting over: higher rates that lower equity multiples, coupled with a recession that crushes earnings. If, instead, a smaller dose of Fed medicine, and consumer resistance to higher prices, brings an earlier cooling, the recession risks would be significantly diminished," he said.

2022's $1 trillion crypto wipeout: 'necessary cleansing' of excess speculation just like dot-com bubble – Bloomberg Intelligence

Expectations of steeper rate increases are again rising, warned DailyFX strategist Michael Boutros.

"Markets are having to reprice Fed's outlook on rates. There is doubt that 50bps at this level of inflation would be enough. If the Fed's 75bps hike is readjusted again, it will be a headwind for gold. Gold is stuck sideways as we wait for that story to flash out," Boutros told Kitco News.

The idea that the Fed is making a policy error by acting too slow is becoming more common, he added. "They need to slam on the break and accelerate rate hikes even faster. At this point, they are already late," Boutros stated.

This is why gold is in a tough spot and could be at risk of a further selloff below the $1,800 an ounce level, especially if there is a close below the $1,791 level.

"With what we are seeing in the equity market, you would expect gold to catch a bid. We did this week, but the rally was unimpressive. From a technical standpoint, we are at risk of testing the lows. The $1,781 level or deeper is still on the table," Boutros noted.

Investors should gear up for a sideways price action until gold can move above the $1,895 an ounce level, he pointed out.

Moya was more optimistic looking further out, with economic growth concerns remaining one of the main stories for the rest of the year. This narrative should weigh on the U.S. dollar index, which has been recently trading near 20-year highs and limiting gold's upside.

"We've seen weaker economic data in the U.S. this week. Even jobless claims went up. All expectations are for data to deteriorate. There should be some pullback for the dollar," he said. "It should be good news for gold. We should see gold hold $1,800 through the next week. But more downside movement in equities could break that."

Moya sees the Fed slowing down once financial conditions tighten enough and credit spreads widen. And this should not be too far out in the future.

"That's starting to happen. If the stock market drops another 5% lower, volatility will spike higher, and credit markets will force the Fed into a less hawkish stance of 25-basis-point hikes. And that's not too far away. It should be good news for gold," Moya said.

Next week's key data releases are flash PMI and personal spending. "Consumer spending is projected to weaken. The FOMC minutes are likely to be dated as we already heard Fed Chair Powell and other FOMC members after the May meeting. Flash PMI will be important, especially if we start to see if data get closer to contraction territory," he outlined.

Next week's data

Monday: U.S. manufacturing PMI

Tuesday: U.S. new home sales

Wednesday: U.S. durable goods orders, FOMC meeting minutes

Thursday: U.S. GDP Q1, initial jobless claims, pending home sales

Friday: PCE price index
 

By Anna Golubova

For Kitco News

Time to buy Gold and Silver on the dips

Tim Moseley

Markets at risk of ‘waterfall event’, this is how gold would perform – Lobo Tiggre

Lobo Tiggre, of The Independent Speculator, claimed that the market selloff is not yet over, and that gold will do well in this environment. Tiggre spoke with David Lin, anchor and producer at Kitco News.

“My concern about a near-term ‘waterfall event’ in the broader markets… is higher now than it has been since 2021,” said Tiggre. “I don’t want to be putting any more cash at risk right now… I sold everything.”

When it comes to gold, Tiggre suggested that the precious metal is resilient in the face of bond-buying and a stronger U.S. dollar.

“People are dumping stocks, they’re buying bonds, even though the Fed is going to be selling because there’s fear in the air,” he explained. “So to see gold still holding 1,800 [USD] in the face of these headwinds tells you something.”

He also commented on the U.S. dollar’s recent performance against gold, “The reality is that the dollar only appears strong. The mayor is still in the glue factory, the dirty laundry hamper is still the dirty laundry hamper. Anybody going to the store, anybody paying rent, they know that their dollars are worth less on their way to perhaps being worthless… [To] the degree that, you know, gold is trading more directly with the dollar, I’m actually a dollar bear.”

Tiggre’s macroeconomic outlook is grim. He said that uncertainty, high inflation, and an economic slowdown will affect markets.

“Nobody really knows what’s going to happen, not even me,” he admitted. “We could be in a recession right now with high inflation… And to think that the Fed can just, you know, raise rates and cure inflation so easily, I think it’s a fantasy. It’s not going to happen.”

To find out Tiggre’s outlook for gold mining stocks and uranium, watch the above video.
 

By Kitco News

For Kitco News

Time to buy Gold and Silver on the dips

Tim Moseley

Gold, silver see solid gains as USDX slumps

Gold and silver prices are posting good gains in midday U.S. trading Thursday. The precious metals are boosted by a sharply lower U.S. dollar index and a slight decline in U.S. Treasury yields on this day. A wobbly U.S. stock market is also working in favor of the metals market bulls. June gold futures were last up $25.40 at $1,841.30. July Comex silver futures were last up $0.321 at $21.86 an ounce.

U.S. stock indexes have seen strong selling pressure recently and are near 12-month lows amid heightened worries about corporate earnings after Wal Mart and Target posted dismal results this week. Both companies cited inflation as the main culprit for their dour earnings numbers. An economic recession in the U.S. is now on the minds of traders and investors who were already saddled with other concerns, including the Russia-Ukraine war and Covid cases causing major cities in China to be on lockdown, which is disrupting global trade. Those concerns are also prompting some safe-haven demand for gold and silver.

U.S. dollar will keep gold price under pressure – VanEcK's Foster and Casanova

The key outside markets today see Nymex crude oil futures prices firmer and trading around $110.00 a barrel. Meantime, the U.S. dollar index is sharply lower and hit a two-week low. The yield on the 10-year U.S. Treasury note is fetching 2.837%.

Technically, June gold futures see a nine-week-old price downtrend still in place on the daily bar chart. Bears have the firm overall near-term technical advantage. Bulls' next upside price objective is to produce a close above solid resistance at $1,900.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the May low of $1,785.00. First resistance is seen at today's high of $1,848.20 and then at $1,875.00. First support is seen at $1,825.00 and then at today's low of $1,808.40. Wyckoff's Market Rating: 3.5

July silver futures prices scored a bullish "outside day" up on the daily bar chart today. A price downtrend is in place on the daily bar chart. The silver bears have the solid overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at $23.00 an ounce. The next downside price objective for the bears is closing prices below solid support at the May low of $20.42. First resistance is seen at $22.25 and then at $22.50. Next support is seen at today's low of $21.25 and then at $21.00. Wyckoff's Market Rating: 2.5.

July N.Y. copper closed up 1,045 points at 428.30 cents today. Prices closed near the session high today. The copper bears still have the firm overall near-term technical advantage. A price downtrend is still in place on the daily bar chart. However, more gains in the near term would negate the downtrend. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 445.00 cents. The next downside price objective for the bears is closing prices below solid technical support at the May low of 403.70 cents. First resistance is seen at 430.00 cents and then at 435.00 cents. First support is seen at 420.00 cents and then at this week's low of 413.15 cents. Wyckoff's Market Rating: 2.5.

By Jim Wyckoff

For Kitco News

Time to buy Gold and Silver on the dips

Tim Moseley

Gold recovers early losses as U.S. stock market melts down

Gold prices are up a bit at midday Wednesday. The yellow metal recovered moderate early losses as some safe-haven demand surfaced amid a big sell off in the U.S. stock market at mid-week. June gold futures were last up $1.40 at $1,820.50. July Comex silver futures were last down $0.11 at $21.64 an ounce.

Global stock markets were mixed overnight. U.S. stock indexes are sharply lower on corrective pullbacks following gains on Tuesday. A big earnings miss from Target help sink the stock market at mid-week. Traders and investors are also tentative on new reports that Covid continues to spread in China, after reports earlier this week that said China's government could ease up on its lockdowns.

Federal Reserve Chairman Jerome Powell on Tuesday afternoon reiterated the central bank's main goal is to tamp down inflation, even if it means pushing up the unemployment rate. He said the Fed "has the tools and resolve" to cool inflation. The marketplace read his latest comments as maybe not surprising but certainly hawkish.

2022's $1 trillion crypto wipeout: 'necessary cleansing' of excess speculation just like dot-com bubble – Bloomberg Intelligence

The key outside markets today see Nymex crude oil futures prices lower and trading around $110.00 a barrel. Meantime, the U.S. dollar index is higher in midday trading. The yield on the 10-year U.S. Treasury note is fetching around 2.9%.

Technically, June gold futures see a nine-week-old price downtrend in place on the daily bar chart. Bears have the solid overall near-term technical advantage. Bulls' next upside price objective is to produce a close above solid resistance at $1,875.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,750.00. First resistance is seen at this week's high of $1,834.80 and then at $1,850.00. First support is seen at today's low of $1,805.00 and then at $1,800.00. Wyckoff's Market Rating: 3.0.

July silver futures see a steep price downtrend in place on the daily bar chart. The silver bears have the solid overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at $23.00 an ounce. The next downside price objective for the bears is closing prices below solid support at $20.00. First resistance is seen at this week's high of $21.925 and then at $22.00. Next support is seen at today's low of $21.38 and then at $21.00. Wyckoff's Market Rating: 2.0.

July N.Y. copper closed down 550 points at 418.25 cents today. Prices closed nearer the session low today. The copper bears have the solid overall near-term technical advantage. A price downtrend is still in place on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 445.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 400.00 cents. First resistance is seen at today's high of 424.80 cents this week's high of 428.25 cents. First support is seen at today's low of 416.10 cents and then at this week's low of 413.35 cents. Wyckoff's Market Rating: 2.0.

By Jim Wyckoff

For Kitco News

Time to buy Gold and Silver on the dips

Tim Moseley

Gold, silver up, but gains fade after upbeat U.S. economic data

Gold and silver prices are just modestly higher in midday U.S. trading Tuesday and lost solid early gains after some stronger-than-expected U.S. economic data and rising U.S. bond yields. The metals were supported by rising crude oil prices that hit a nine-week high earlier today, and sharp daily losses in the U.S. dollar index. However, crude oil prices did back down as the session progressed. June gold futures were last up $2.50 at $1,816.50. July Comex silver futures were last up $0.134 at $21.685 an ounce.

The U.S. retail sales report for April showed a rise of 0.9%, which was close to market expectations. However, March retail sales were revised up to 1.4%. April U.S. industrial production for March came in strong at up 1.1% versus expectations for a rise of 0.5%. After these reports’ releases the metals started to ratchet down from their overnight highs.

U.S. stock indexes are higher at midday. The marketplace is more upbeat Tuesday on reports China will start to ease its lockdowns in major cities, including Hong Kong and Shanghai.

The marketplace will be watching a scheduled Wall Street Journal interview with Fed Chairman Jerome Powell this afternoon. Traders and investors will be keen to see if Powell remarks on timing aspects of Fed monetary policy and/or inflation, as well as the prospect of the U.S. economy entering a recession.

Gold faces new competition as real yields turn positive – USBWM

The key outside markets today see Nymex crude oil futures prices weaker after hitting a nine-week high early on, and is presently trading around $113.00 a barrel. Meantime, the U.S. dollar index is lower. The yield on the 10-year U.S. Treasury note is fetching around 2.9%.

Technically, June gold futures prices see a nine-week-old price downtrend in place on the daily bar chart. Bears have the solid overall near-term technical advantage. Bulls' next upside price objective is to produce a close above solid resistance at $1,875.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,750.00. First resistance is seen at today’s high of $1,834.80 and then at $1,850.00. First support is seen at $1,800.00 and then at this week’s low of $1,785.00. Wyckoff's Market Rating: 3.0

July silver futures see a steep price downtrend in place on the daily bar chart. The silver bears have the solid overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at $23.00 an ounce. The next downside price objective for the bears is closing prices below solid support at $20.00. First resistance is seen at $22.00 and then at $22.50. Next support is seen at $21.50 and then at $21.00. Wyckoff's Market Rating: 2.0.

July N.Y. copper closed up 445 points at 423.50 cents today. Prices closed nearer the session low today. The copper bears have the solid overall near-term technical advantage. A price downtrend is still in place on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 445.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 400.00 cents. First resistance is seen at today’s high of 428.35 cents 430.00 cents. First support is seen at today’s low of 420.30 cents and then at this week’s low of 413.35 cents. Wyckoff's Market Rating: 2.5.

By Jim Wyckoff

For Kitco News

Time to buy Gold and Silver on the dips

Tim Moseley

Short-covering in gold silver; bulls have more heavy lifting ahead

Gold and silver prices are higher, with silver sharply up, in midday U.S. trading Monday. Gold hit a nearly four-month low overnight. Short covering by the shorter-term futures traders was featured on this first day of the trading week. A weaker U.S. dollar index, higher crude oil prices and lower bond yields on this day also worked in favor of the metals markets bulls. However, the bulls need to put together some solid price-gain days to begin to repair recent chart damage. June gold futures were last up $4.70 at $1,813.10. July Comex silver futures were last up $0.479 at $21.48 an ounce.

Global stock markets were mixed but mostly lower overnight. U.S. stock indexes are mixed at midday. The S&P 500 stock index last week had its worse week in 11 years. The U.S. index is now flirting with being in a bear market that is defined by the indexes being down 20% from its recent high. The Russia-Ukraine war, Covid lockdowns in China and inflation fears are hitting the equities hard. The risk aversion seen in the marketplace recently is bullish for gold and silver, but bulls have been perplexed their metals have not seen much upside price performance by such.

U.S. dollar could dominate gold price through the summer – analysts

The key outside markets today see Nymex crude oil futures prices higher, at a two-month high and trading around $112.50 a barrel. Meantime, the U.S. dollar index is lower in midday trading. The yield on the 10-year U.S. Treasury note is fetching 2.86%.

Technically, June gold futures prices hit a nearly four-month low early on today. A nine-week-old price downtrend is in place on the daily bar chart. Bears have the solid overall near-term technical advantage. Bulls' next upside price objective is to produce a close above solid resistance at $1,875.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,750.00. First resistance is seen at Friday’s high of $1,827.60 and then at $1,850.00. First support is seen at $1,800.00 and then at today’s low of $1,785.00. Wyckoff's Market Rating: 3.0

July silver futures saw short covering featured. Prices hit a 22-month low Friday. A steep price downtrend is in place on the daily bar chart. The silver bears have the solid overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at $23.00 an ounce. The next downside price objective for the bears is closing prices below solid support at $20.00. First resistance is seen at $21.625 and then at $22.00. Next support is seen at $21.00 and then at today’s low of $20.835. Wyckoff's Market Rating: 1.5.

July N.Y. copper closed up 115 points at 418.65 cents today. Prices closed nearer the session high today. The copper bears have the solid overall near-term technical advantage. A steep price downtrend is in place on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 440.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 400.00 cents. First resistance is seen at today’s high of 420.60 cents 425.00 cents. First support is seen at today’s low of 413.35 cents and then at 410.00 cents. Wyckoff's Market Rating: 2.0.

By Jim Wyckoff

For Kitco News

Time to buy Gold and Silver on the dips

Tim Moseley

Gold price in 5 years: $1,300 or $4,000?

A massive selloff in U.S. stocks, extreme panic in the crypto space, and the worst week for gold in almost a year are just a few headlines that describe the volatility seen all across the board. Here's a look at Kitco's top three stories of the week:

3. 'Extreme panic' in crypto: How risky is Bitcoin price below $30k?

2. Gold price is in a 'danger zone'

1. Gold price's 5-year outlook: $1,300 or $4,000? MKS PAMP weighs in

By Anna Golubova

For Kitco News

Time to buy Gold and Silver on the dips

Tim Moseley

Gold price sees worst week in 11 months, but is the market oversold?

The gold market is looking to close the week down around 4%, its worst weekly close since mid-June 2021. But its current price level of around $1,800 an ounce could put gold at risk of a bigger selloff, according to analysts.

Gold was hurt by technical selling pressure after dropping below the $1,830 an ounce Thursday, which served as support. The precious metals also suffered from higher U.S. dollar and expectations of an aggressive Federal Reserve following hotter-than-expected inflation data.

June Comex gold futures were last at $1,809.90 an ounce, down more than $70 on the week.

"We've seen the CPI come in stronger than expected this week. The 8.3% pace in April is problematic, especially after markets were expecting 8.1%. That automatically told us that the Federal Reserve would not soften its hawkish stance," TD Securities head of global strategy Bart Melek told Kitco News. "It's unlikely that inflation will come off sharply any time soon."

This outlook has weighed on gold and the precious metal moved significantly lower. "The $1,830 was good support, but we breached it. Now, $1,790 is the next support level as gold consolidates," Melek said.

Gold was also used this week for liquidity purposes amid a massive selloff in U.S. equities, with the S&P 500 falling 18% since the end of December.

"Gold's decline is investors covering losses elsewhere. Liquidation for traders and investors to make up for major losses seen in equity markets. Gold is one of the easiest things to convert into cash when times are tough," Gainesville Coins precious metals expert Everett Millman said Friday.

Looking into next week, if $1,800 is breached, gold is at risk of a steeper selloff. But traders should widen their trading range for gold in the short-term due to ongoing volatility in all markets, Millman added.

"Risk of falling further below $1,800 is present right now, more so than ever before this year. We are likely to see a lot of sideways trading," he told Kitco News. "Even with elevated downside risk, we still can get back above $1,900 in a matter of weeks. Traders need to widen gold's range due to the side effect of heightened volatility."

Gold price is manipulated by the Fed, suspects mining tycoon Frank Giustra, but suppression can't last forever

The $1,830 to $1,790 is the likely range for gold next week, said Melek. "There is a risk of gold dropping even lower, especially if we see better than expected economic numbers, elevated energy prices, or disappointment in crop data. If the Fed rate hike estimates move up, gold gets hit a bit more," he added.

A lot of money was pulled out of all markets this week, including equities, crypto, and gold, said RJO Futures senior market strategist Frank Cholly. What matters now is the technicals, which is the $1,800 an ounce level for gold.

"It is a big level, and $1,775 could be in the cards as well," he told Kitco News. "The market at least pauses here and goes sideways as it builds another base and recovers. We've taken a lot of premium out of the market."

The gold market is now oversold, and it won't be surprising to see a bounce back to $1,865 an ounce and then to $1,900 an ounce, Cholly added. "The selling in gold is overdone, and it is closer to the bottom than the top at this level," he said. "A close above $1,840-$1,850 is necessary to encourage the move. Investors have to watch the U.S. dollar and interest rates."

Data to watch

Monday: NY Empire State manufacturing index

Tuesday: Retail sales, industrial production, Fed Chair Powell speaks at the Wall Street Journal Future of Everything Festival

Thursday: jobless claims, Philadelphia Fed manufacturing index

By Anna Golubova

For Kitco News

Time to buy Gold and Silver on the dips

Tim Moseley

Gold lost 3.82% this week, resulting in a fourth consecutive weekly decline

Gold opened at $1977 on Monday, April 18, and this would mark the beginning of four consecutive weekly declines. As of 5:10 PM EDT gold futures basis, the most active June 2022 Comex contract is fixed at $1810.30 after factoring in today’s decline of $14.30 or 0.78%. Today’s decline in gold occurred without the benefit of dollar strength. The dollar index declined by 0.36% and is currently fixed at 104.515

The image above is a screen-print of the KGX (Kitco Gold Index) which was taken at 4:37 PM EDT. At that time spot gold was fixed at $1810.80 after factoring in a decline of $10.70. Market participants were active sellers resulting in a $14.30 price decline. Dollar weakness provided mild tailwinds adding $3.60 (+0.20%) in value.

The decline this week was the strongest percentage drawdown of the four weeks losing 3.87%. Considering that over the last four weeks gold’s value has decreased by 8.44%, almost half of that decline occurred this week. This correction devalued the price of gold by $167 per ounce, with $73 of that decline occurring this week.

Over the last four weeks, a major factor pressuring gold prices lower has been dollar strength. The dollar has gained value for the last six consecutive weeks. Over the last four trading weeks, the U.S. dollar has gained 4.15% in value. This means that dollar strength accounted for just under one-half of gold’s price decline.

The dollar has been trading in a defined range since the beginning of 2017. In January 2017 the dollar index opened at 102.80 and traded to a high of 103. 78 becoming the first instance of dollar strength at this level since 2003. Since 2017 the dollar index has traded to this level on three occasions.

Both the 2017 top as well as the second instance which occurred in March 2020 created a double top. In both instances, dollar strength peaked at these levels resulting in a price correction that followed these tops. This month the dollar not only challenged the highs created during the double top but effectively closed above them on a daily, weekly, and monthly chart.

The dollar index declined today by – 0.36%. However, the dollar had a strong weekly gain. Currently, the dollar index is fixed at 104.515 and the last time the dollar was this strong was the fourth quarter of 2002.

Yesterday I addressed that recent price changes in the dollar and gold have been headlined driven based upon fundamental events. Because technical studies by nature are lagging indicators there is an inherent disconnect. I was blessed to be mentored by two great market technicians one being Larry Williams. He told me a story that illustrated the shortcoming of only using technical indicators.

To paraphrase: A market technician is analogous to someone standing at the stern of a boat and using the wake from the propeller to indicate the direction the ship was headed. While it indicated where the boat had been, only the captain knows when he will turn the wheel.

In this instance the Federal Reserve is at the helm attempting to steer the ship through a storm brought on by rampant inflation.

By Gary Wagner

Contributing to kitco.com

Time to buy Gold and Silver on the dips

Tim Moseley