In our Aug 28, 2019 Update on Gold I noted that although GC had just reached our 1560 target, ZN had also reached our 132’100 target. The picture was further muddled by the fact that DXY and GC had been moving in unison – an unusual occurrence, to say the least.
ZN’s resistance could put the brakes on, meaning rates would rise and GC would theoretically fall. But…I expect ZN’s pullback to be modest — possibly only 3-4% — suggesting GC’s pullback would also be fairly modest.
As it turned out, GC and ZN both reversed. Although DXY made a half-hearted effort to break out, it was limited to 1.5% and GC’s reversal was limited to 1446.
DXY’s rally stopped making any sense at all once FOMC members began hinting at additional rate cuts. When the Fed resumed QE (QE-not as we like to call it), the market knew what to do: DXY has been steadily selling off and GC has climbed back to within $30 of its August highs.
Does this mean more upside ahead?
continued for members…
Sorry, this content is for members only.Click here to get access.
Already a member? Login below… |