US Dollar Rebound Increases Near-Term Risk

Last week we noted that the odds favored more upside in precious metals before a larger correction would begin. While that view remains on track, we want to note the renewed strength in the US Dollar which could provide immediate resistance to higher levels in Gold and gold stocks.

The chart below plots the weekly candles for the US$ index and the net speculative position in the US$ index. The US$ index closed back above its 200-day moving average (97) and remains well above its 400-day (or 80-week moving average). The larger consolidation appears to be an ascending triangle which is a bullish continuation pattern. Upon breakout through 100, the pattern projects an upside target of 107. Moreover, although the US$ index is only a few points from major breakout territory its net speculative position (as of Tuesday) is the lowest in 18 months!

Feb262016USD

US$ Index & CoT

 

The improving prognosis for the US$ index could be due to renewed weakness in the Yen. The chart below plots the Yen/US$ pair and Gold. Many other analysts long before me have noted the strong correlation between the two markets. The Yen/US$ pair may have formed a double top at 0.90. If that is the case then it has more downside potential in the short-term. Meanwhile, the question for Gold, which closed the week at $1220/oz is if it can hold support at $1180-$1200/oz.

Feb262016YenGold

Yen/US$, Gold

Recent strength in the miners (GDXJ, GDX) has suggested Gold will hold above its key support at $1180-$1200/oz. However, there has been distribution in three of the past four trading days. If the miners can hold above support at point 1, (see the chart below) it would reinforce a bullish short-term outlook. In the case of a very strong US$ breakout and Gold losing $1200/oz then the miners could end up falling to point 2.

Feb262016miners

GDXJ, GDX Daily Candles

The rebound in the US$ index coupled with the failure of Gold and gold miners at resistance over the past three days puts us on guard for the start of a larger retracement in precious metals. The potential double top in the Yen/US$ pair as well as the mini breakdowns in Silver and Platinum are also cause for concern. It is certainly possible that precious metals can rally temporarily with a strong US$ and reach the upside targets mentioned last week. However, a strong breakout in the US$ index above 100 could very well precipitate the next correction in Gold and gold stocks if it has not already started. Consider learning more about our premium service including our favorite junior miners which we expect to outperform in 2016.

Jordan Roy-Byrne, CMT
Jordan@TheDailyGold.com

First published here: http://goldsilverworlds.com/gold-silver-experts/us-dollar-rebound-increases-near-term-risk/

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Gold Rose Another 10% In February – Best Month Since January 2012

Gold Rose Another 10% In February – Best Month Since January 2012

Gold bullion rose 10.1% in February adding to the 7% gains seen in January. This means that gold is the best performing asset this year, up 17% so far in 2016. Silver is the next best performing asset with an 8% gain year to date, followed by US Treasuries (30 Year Bond) which have gained 7.8% so far in 2016.

Comparatively, the S&P 500 index is down 4.7% this year, the Dow Jones Industrial Average is down 4.5% and the NASDAQ is down 7.8%. International indices have also seen losses with the FTSE down 2.6%, the DAX down 10.7% and the Nikkei down 13.7% (see table below).

performance_februaryMarket Performance in February – Finviz.com

Gold is again acting as a hedge for investors and pension owners exactly when they need a hedge.

The biggest influence going forward for gold is “likely to be risk appetite and concerns about markets and the global economy,” Mark O’Byrne, research director at GoldCore told Marketwatch.

“If stock markets begin to recover and make gains and risk appetite returns, then gold could come under selling pressure,” he said. “However, we believe the volatility seen in the first two months is likely to continue.”

Read more on Marketwatch here

 

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LBMA Gold Prices
01 Mar: USD 1,240.00, EUR 1,141.70 and GBP 886.09 per ounce
29 Feb: USD 1,234.15, EUR 1,131.46 and GBP 890.95 per ounce
26 Feb: USD 1,231.00, EUR 1117.58 and GBP 878.87 per ounce
25 Feb: USD 1,235.40, EUR 1,121.41 and GBP 887.10 per ounce
24 Feb: USD 1,232.25, EUR 1,122.33 and GBP 885.52 per ounce


Gold and Silver News and Commentary

– Gold scores for biggest monthly gain in four years – Marketwatch
– Gold extends gains on safe-haven bids, fund inflows – Reuters
– Gold prices gain strongly in Asia after weak China PMI reading – Investing
– Gold Assets in World’s Top ETP Reach Highest Since September – Bloomerg
– Barclays shares drop 6% after £1.9bn loss and divi cut – FT

– Eurozone Slides Back Into Deflation – Telegraph
– Socialism has created a humanitarian disaster in Venezuela – City AM
– Gold Glows As Stocks Suffer Longest Losing Streak Since 2011 – Zero Hedge
– Patiently Climbing Aboard New Gold Bull – AU Report
– Wall Street Gold Buying Binge Continues – GLD back to 25M ozs – GoldSeek

Read more here


by Mark O’Byrne

www.Goldcore.com  

First published here: http://www.zerohedge.com/news/2016-03-01/gold-rose-another-10-february-%E2%80%93-best-month-january-2012