Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

How Long Will the Dollar Keep Drowning Metals?


The beginning of November should provide some clues.

Precious metals moved lower this week -- a move that was accompanied by a decline in the general stock market and a small rally in the USD Index. The situation in the main stock indices is still rather unclear, so this week I'd like to point your attention to the US dollar as it provides clues invaluable to anyone involved in the precious metals sector. After all, there's a clearly visible negative correlation between the USD Index and gold, silver, and precious metal stocks.

Let's begin with the chart featuring the USD Index in the medium term, and after that I'll move to the short-term analysis.


The US dollar is trading in the area marked with a red ellipse, as I indicated a week ago, and has been mostly trading in its lower part. This, however, changed this week, as USD moved higher, to the upper part of the ellipse, and touched its resistance near the 76 level. Consequently, we've seen precious metals move lower.

The RSI indicator is moving toward the 50 level, which marks all local tops since June. Will history repeat one more time? It's impossible to tell, but given the reliability of this particular signal in the recent past, it's likely.

Taking the shape of the recent downswing into account may suggest that the USD Index is now near breaking out to the upside, but before going long this market, please note that until the breakout takes place, the trend remains down.
< Previous
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Featured Videos