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For Clues to Gold Prices in 2013, Look Beyond US Dollar

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The picture can change significantly from the perspective of different currencies.

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Let us now move on to the Canadian dollar perspective.



In this chart, the statements made in the previous section hold true as well here (again, based on Thursday's closing prices). Gold priced in Canadian dollars declined by less than 1% ($0.12) in the past week and the recent breakdown was invalidated.

Now, we'll move on to the Japanese yen perspective, where the situation is even more interesting.



The situation is definitely not the same here. Gold rallied nearly to the level of its 2011 high. This was about 2.5 % above last Thursday's close and gold priced in yen is now about 1.5% higher than a week ago.

To finish off, let's have a glance at a chart that synthesizes the "non-USD" perspective, as it features gold price relative to an index of many foreign currencies.



Here we see that the breakout above the medium-term declining resistance line has been confirmed and the breakdown invalidated. The medium-term trend remains bullish. More importantly, we see that this important ratio has some space before it moves to the declining support line, so perhaps it will not move below it today and the overall non-USD picture will remain bullish.

Summing up: The situation has deteriorated a bit for gold from the USD perspective on Thursday, and the situation became mixed based on Friday's pre-market price moves. Even though the most part of these declines has been invalidated, the market is still lower than where it closed yesterday. The situation seen from the non-USD perspective remains favorable and this, plus the reversal seen just before markets opened today, makes the overall medium-term picture bullish.

For the full version of this essay and more, visit Sunshine Profits' website.

Twitter: @SunshineProfits
No positions in stocks mentioned.
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