The dollar took a big hit today and while gold did rise today, it didn’t make a huge move up like it should have. There is still a lot of resistance holding gold back and this should be telling for those wanting to go long. Mining stocks also couldn’t muster much of an up day and a couple more junior miners declared bankruptcy showing how tough things really are behind the scenes. I expect it to get worse on all fronts.
Could we have a bounce? As I have said, keep an eye on the dollar for signs. Yes, the dollar and gold don’t always trade together, but eventually, given enough time, they do. And when there are no other signs to buy gold, I have to turn to this relationship to try and predict future, at least from a micro trading point of view.
If we are going to get a pop higher in gold at this point, then the dollar needs to break that low from last week just under 94.80. Keep an eye on that level for a sign to attempt a long. Over 97.80 and I would be looking to short gold or hedge your longs. Over 97.80 and then 100 should coincide with breaking the lower lows of November 5th, 2014 in the $1,130- $1,140 level.
In my ETF Research Trading Analysis, I have been calling for a weaker stock market or a short term pullback before we hit higher highs later on this summer. Don’t know the exact timing, but today’s price action on no real economic data is showing me this may be the case. Once profit taking takes hold, whether it is individuals, professional traders or computer trading programs, expect a directional move of some significance.
UVXY or volatility (VIX chart is in agreement) is what I also keep an eye on. It looks like it wants to break higher here on the one month chart.
If this is the case, then the mining stocks will also be taken down some and even more so if gold also breaks those Nov. 5th lows. This is what I have been waiting patiently to see occur.
Lastly, I see the 10 year topping here. Below is the 1 year chart and the 2.40 level seems to be resistance and we may see bonds get stronger, especially with an overall stock market dip.
Maybe all that negative data is finally catching up to the markets. But it still at this point isn’t helping gold.
Doug Eberhardt is a 28 year financial services veteran and precious metals broker selling gold and silver at 1% over wholesale cost. Doug has written a book to help investors understand how gold and silver fit into a diversified portfolio, how to buy gold and silver, and what metals to buy. The book; “Buy Gold and Silver Safely” is available by clicking here Contact phone number for Buy Gold and Silver Safely is 888-604-6534
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