As far as implications for the USD Index are concerned, we've been trading sideways for approximately a month now -- a considerable amount of time -- thus making the correction more likely to be completed soon. This is naturally bearish news for the US dollar and bullish for the precious-metals market.

General Stock Market

Previously, I warned that there are signs that the general stock market may move lower in the short term. Should that be the case, it could affect the prices of precious metals --particularly silver. Still, I believe this would only be temporary.

This has been the case this week, as the SPY ETF moved lower on higher volume.

Not only has the general stock market moved below the May lows, but it's done so on a relatively (compared to the previous week) high volume, which makes this move more important. Additionally, the head-and-shoulders formation appears to be completed:



The breakdown below the neck level (currently below the 90 level) has been confirmed by a relatively high volume just after it materialized. Additionally, we witnessed a brief pullback to the neck line, which didn't close above it, thus confirming the formation. Unless we see a sharp move above this line (89 level) on Monday or Tuesday, the technical picture remains bearish for the general stock market.

Gold

This week has been disappointing for precious-metals investors as gold, silver, and corresponding equities followed the general stock market lower.

Gold moved lower despite the technical similarity to a previous pattern that was followed by higher prices. Higher prices were likely, but of course, not guaranteed. In order to make calls that have the greatest probability of being correct, it's important to always take what the market provides and use it on an “as is” basis.

Currently, gold appears to be close to bottoming out, as it seems to be forming the zigzag correction pattern. As mentioned in the past, precious metals tend to correct in a zigzag fashion, and this time we could see another example of this tendency -- meaning the bottom is rather near. Meanwhile, the medium-term chart has not changed much in the past week.