The U.S. Dollar Recovers To Spook Gold

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Includes: AAAU, BAR, DGL, DGLD, DGP, DGZ, DZZ, GLD, GLDI, GLDM, GLDW, GLL, IAU, IAUF, OUNZ, PHYS, QGLDX, SGOL, UBG, UGL, UGLD
by: Bob Kirtley
Summary

Gold has been unable to break through the resistance level of $1,350/Oz and as the chart depicts, once again it has failed in its attempt to break free.

The technical indicators for the USD were suggesting that a revival was on the cards and sure enough, it arrived mid-week when it closed at 97.63.

All in all, the upward pressure on the precious metals sector is steadily increasing which should result in a sparkling future for those who are positioning themselves now.

Preamble

Since the last all-time high of $1,900/Oz made in 2011, Gold Bugs have taken it on the chin as gold fell from grace resulting in many investors leaving this space in search of greener pastures. In recent years, gold has levelled out and is indeed shaping up for a comeback as it once again eyes the near-term resistance level of $1,350/Oz.

For many investors breaching this level won't be good enough to tempt them into parting with their cash, it will take something more substantial like a weekly close above $1,450/Oz. And that is only the point that they start to think; preparation, raising funds, the selection process when considering precious metals stocks etc, will all take a little time. However, the gold train will be moving, and they will get on board in order to partake in the upcoming rally. New investors bring new money and add to the momentum that has already started accelerating prices to new all-time highs.

A quick look at the Gold Chart

Gold has been unable to break through the resistance level of $1,350/Oz and as the chart depicts once again, it has failed in its attempt to break free and put in a decent rally. The technical indicators, RSI, STO, and the MACD are now in the oversold zone suggesting a near-term recovery.

http://gold-prices.squarespace.com/storage/Gold%20chart%2010%20March%202019.jpg?__SQUARESPACE_CACHEVERSION=1552182736384

A quick look at the USD Chart

Over the last 5 months, the dollar has struggled to get above the resistance level of 97. The technical indicators were suggesting that another challenge was on the cards and sure enough, it arrived mid-week when it closed at 97.63. If the dollar can hold onto these gains, then there will be more downward pressure on gold due to the dollar/gold inverse relationship.

http://gold-prices.squarespace.com/storage/USD%20Chart%2010%20March%202019.jpg?__SQUARESPACE_CACHEVERSION=1552182792434

The question is can it stay there and cap gold's advance; we doubt it, but this battle has to be won by gold in order to gain credibility with investors.

Conclusion

The absence of rate hikes in the US will become apparent as this year progresses and the demise of the dollar will be considerable. Given the dollar's inverse relationship with gold, its fall will be supportive of gold prices.

The demand side for gold has improved as Central banks are buyers once again.

Gold and silver are becoming more and more difficult to find and mine which means supply cannot suddenly be increased to satisfy the increased demand.

All in all, the upward pressure on the precious metals sector is steadily increasing which should result in a sparkling future for those who are positioning themselves now to take full advantage of this upcoming bull market.

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