Gold continues to be rangebound, but with a modest downside bias. Prices continue to be in thrall to the US dollar. Yesterday, the dollar went up, and gold fell. This morning, the dollar went down, and the gold rallied. There will come a time when this negative correlation will break down, and gold can do its own thing.
Source: TN Trader
But for now, the two are tied at the hip, which makes life somewhat frustrating for gold bulls. After all, isn’t gold the world’s ultimate safe haven? Haven’t central banks been buying up and hoarding unprecedented amounts of bullion (well, not the Bank of England, obviously)? Yes, and yes. But this doesn’t matter. Gold’s melt-up and subsequent crash at the end of January have left many gold bulls scarred and upset.
It was a painful lesson, felt by silver bulls as well, although, as is often the case, the latter’s punishment beating was far more severe. The question precious metals bulls should be asking is if this is a repeat of 2011/12? If not, then there’s a chance that both precious metals can put in another rally to new all-time highs.
If it is a repeat, and bear in mind there was a failed rally attempt which peaked in early March, then any fresh assault on January’s record highs may well be followed by a protracted bear market.
* The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance.
