Will The Price Of Gold Benefit From The Dollar Breakdown?
Taki Tsaklanos | May 18, 2017 12:08AM ET
The US dollar has started to break down. As suggested by this article by our research team back in April, gold and dollar are close to bullish or bearish trends, when the dollar and the gold price were very close to starting a new trend.
At that time, both gold and the dollar were moving in a similar type of triangle pattern. As they were approaching the apex, it was clear that a new trend was about to start.
Two weeks ago, gold started a breakdown, right at a time when gold miners flashed a bearish sign, leading us to conclude that gold would start a bearish trend.
However, after two weeks, gold came back and re-entered its triangle pattern again (see the first chart). That happened right on the same day when the dollar broke down (see the second chart).
The dollar needs to confirm its current breakdown. Gold needs to confirm its false breakdown of early May.
Said differently, the dollar and gold can still go in either direction. The dollar’s chart, however, looks less constructive than gold's. The coming weeks will be critical for both markets.
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