of the key technical signals we were looking for in anticipation of a new
major rally in gold was a close above the 50-day moving average. Well, last
week gold delivered that signal, twice.
we still need to see a close above $1,220 to confirm this move, we are now
very confident that a major rally in gold prices will begin in earnest in the
next couple of weeks.
week we wrote that we were expecting a rebound in the US dollar from oversold
conditions. Sure enough, the rebound in the USD did eventuate, with the index
rising from 80 to almost 83 in a matter of days.
we had thought that this rebound in the US dollar would cause gold prices to
fall slightly, but this did not happen, instead we saw gold prices increasing
with the USD.
recent positive correlation between the USD and gold has caught our
attention, since over the past few years the two have tended to be negatively
correlated, with gold moving inversely to the USD with some leverage factor.
simply putting together some charts of gold versus the US dollar over the
course of this gold bull market. it become clear that although the
relationship is largely inverse, there are periods where the two move
not claim to be specialists in the field of market cycles, however it appears
to us that after roughly four years of moving inversely, gold and the USD
then began to move together for roughly seven months, before moving inversely
again for another four years. They have now been moving together to
approximately eight months, so if the pattern described above were to
continue then one would expect the US dollar and gold to begin moving
inversely to each other very soon, and for this negative relationship to
continue for four or so years to come.
we are bearish on the USD and bullish on gold over the next few years, this
general cyclical analysis fits with our current outlook.
conclusion, although the inverse relationship between gold and the USD does
not always hold, this has not affected our gold price forecasts. We think
gold will make a new all time high before the end of the year, and probably
fact, we are so confident that if you sign up to a 12-month OptionTrader
subscription before Sept. 1, we will refund your $179 fee if gold prices do
not make a new all time high in 2010! Visit www.skoptionstrading.com
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