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The Gold Currency Index Negatively Diverges From Gold

|Includes:GDX, SPDR Gold Trust ETF (GLD), SGOL

Gold closed sharply lower today, returning to recent short-term lows of the downtrend from late February. A close well below $1,644 would reconfirm the downtrend and forecast a relatively quick move down to strong congestion support in the $1,600 area. Technical indicators are now moderately bearish overall on the daily chart, favoring a continuation of the decline.

 

 

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The Gold Currency Index (NYSE:GCI) closed sharply lower today as well, moving down to a new short-term low for the downtrend from February and thereby diverging negatively from gold. Technical indicators are moderately bearish overall on the GCI daily chart, favoring a continuation of the decline down toward congestion support in the 39.60 area.

 

 

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A negative divergence has also developed between the GCI and gold with respect to their intermediate-term views and an important signal may occur at the end of the week. The GCI has a long history of predicting meaningful developments in the gold market, often through divergences such as this one, so it will be important to monitor gold and the GCI closely for the rest of the week. We will identify the key developments as they occur in our daily market forecasts and signal notifications available to subscribers.

Disclosure: I am long SGOL.

Stocks: GLD, SGOL, GDX