Has the US dollar topped?
As a number of analysts have noted, gold and the dollar have an asymmetrical relationship. Gold tends to do well when the dollar is falling against other currencies and it tends to be suppressed somewhat less by a rising dollar. This year, the dollar has made new highs in the move that started last July but gold has not made new lows.
Has the US dollar topped?
As a number of analysts have noted, gold and the dollar have an asymmetrical relationship. Gold tends to do well when the dollar is falling against other currencies and it tends to be suppressed somewhat less by a rising dollar. This year, the dollar has made new highs in the move that started last July but gold has not made new lows.
On April 13/15, the dollar recovered almost all the ground lost in the correction since the March 17 high but stopped just short of making a new high. Was this a failing rally? Since then, the dollar has fallen and volatility has been immense. Has the dollar topped? It's too early to say but this bears watching. The dollar has been gold's competitor for safe haven wealth and a strong competitor at that. If the dollar enters a sustained decline, gold will find a western bid to go along with strong Asian accumulation.
A possible dollar top could be the message in the oil market and other commodities such as copper which have moved well off their lows this month. The commodity currencies have also perked up; the Canadian dollar was the first to rally and is now at 81.7 US cents from a low of 77.9 last month. The US dollar has made three successful tests of the 50-day moving average since the high in March and bounced each time. It has not broken the 50-day since the upward move gained momentum last July. The greenback now hangs just above the 50-day once again (see chart below). Let's see if it breaks this time. If it does, gold looks to be a buy and even more so, the gold stocks.
