While I’m expecting some kind of pullback at the $1390-$1400 level, I don’t think gold’s intermediate cycle will top until at least retracing the 50% Fibonacci level and probably back to $1550 by September. This will almost certainly be driven by an aggressive moved down in the US Dollar as it really starts to accelerate into the next 3 year cycle low due sometime net summer or fall.

Gold Dollar
The dollar couldn’t even close above the 200 DMA on the monster jobs report. Notice the 200 DMA is rolling over.

The net intermediate cycle low will be due in September or early October. I don’t think a test of the 85 zone is an unreasonable target.
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15 thoughts on “CHART OF THE DAY – GOLD & THE DOLLAR

  1. s29

    Gold can presumably rally, but why would the Euro rally? Now Deutsche Bank says the Euro banking system needs 150 billion to save it. USD Index is still almost 60% EURUSD.

    1. Gary Post author

      i could ask the same question about the dollar. How in the world did it rally while the Fed was doing a multi-trillion dollar QE program?

      1. ras

        First, some kind of pull back for gold, then possible higher levels. Weekly buy signal on nas BP, intraday dips notwithstanding. ERX flat lining, uninteresting for now. Many dow stocks at the starting gate of intermediate weekly advance, Ditto many NDX stocks. Weekly charts worth checking. Time will tell.

  2. Kanselier

    You have been saying for a while that pm’s and us equity would go up together for a while.
    Have we seen that now and did it end?
    In case we break ath’s in spx/dow i can imagine money from the bondmarket to be moved towards equities.
    This will reinforce confidence and put pressure on pm’s.
    Also in terms of cycles, which i know you are following.
    There is a corelation between all commodities in certain extent, oil seems to have topped for now a couple of weeks ago and is making a correction.
    I see you are expecting the same.
    However i am suprised you claimed that they would go up together a while ago.
    Also what about europe?
    Political/financial its a mess.
    I can imagine further pressure will make more money flow towards us and if us breaks new ath’s all equities might follow for a while but that stil doens’t change the issieus in europe.
    Whats your vieuw on that?

    1. Gary Post author

      Just because stocks are making new highs doesn’t mean liquidity will come out of gold. The norm over the last 16 years has been for everything to go up together. We are back in that environment now that the manipulation of the metals market has ended. QE should land on everything indiscriminately.

      Haven’t you figured out by now that when things look the worst it usually means you are near the bottom. Things look bad in Europe, probably means the bottom is in as the ECB will just do more and more QE.

      The only thing that can’t be fixed with the printing press is inflation.

      1. Kanselier

        I believe your right Gary.
        But to be more certain personally i’ll stay away from indices till that ath gets taken out.

        Thank you for your answer, much appreciated.

  3. rainman

    Gary, Wheat seem to have just joined the inflation bandwagon. One more nail to the USD. Could you take a look?

  4. Gary Post author

    Looks like the S&P is going to make new highs today. That means I’m going to win all kinds of burrito bets. 🙂

    Pay up perma bears.

    Better still, get long so you can stop losing money and make some money for a change. The stock portfolio is going crazy right now.

  5. Alexandru Popovici

    Gary, Chris, yes, you were right: we are in a new multi-YC.

    Last week I lost -0.4% of equity with 2 short-stocks pilots.

    Now I’ll initiate pilots in several stocks, amongst which TTS, EGHT, SCAI.
    I stay out of IBB. I prefer buying relative strength – ERI, a stock I touted here some time ago and advised going in instead of IBB has clearly been a better choice than a segment which has tested its lows recently.

  6. Steffmeister

    No no no no Gary, we are in a BEAR in both Gold and S&P500 !!!

    Be very careful here Gary, the more they pump it up the harder the fall ! Look at NIKKEI, irresponsible easing comes with severe consequences!

    The decision is not made yet, I am looking at two places to make the confirmation. I will get back here when the alarm bell starts ringing.

    Btw, I am making alot of money in precious metals stox at the moment I’ve been long since last summer, so no need to call me a perma bear! I am just taking advantage of the waves in the fractal structure of the markets, it’s great fun 🙂

    1. Gary Post author

      Nope this is a new 7 year cycle. This is why cycles are so much more important as a timing tool than virtually any other method.

      1. Steffmeister

        Yes cycles is important, remember the presidential 8year crash cycle 😛 Bush at 2000 and Obama at 2008, Trump 2016?

        Of course they could extend it into 2017, but seven years up No way José !

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