Thursday, September 4, 2014

The problem with gold:

Investors and traders in the gold complex are running out of patience in reaction to the slump in the sector following an early summer rally. Nothing is working be it seasonal, Russia or the so-called extended global equity markets.

I think our dollar/gold chart pinpoints the real problem – the strong U.S. dollar which has been the go-to place – well since early summer. As we can see the price relationship is somewhat inverse – dollar up – gold down and vice-versa as displayed by the lower US$ vs. gold study. The big disappointment for gold investors was due to the early summer advance in spite of the dollar advance – this appeared to be a set-up for a dollar peak which did not occur. Let us see if the US Dollar index trades back up to the 84 level – or the $23 level on the UUP – and then look for the gold complex to rally.

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