On the heels of the price of gold tumbling 4% and the US dollar rallied nearly 1%, it’s time to keep an eye on the US dollar.
August 19 (King World News) – The US dollar has been trading lower after entering its cyclical bear market in March, but it may be time for a countertrend rally in the dollar. If you look at the chart below you will see bullish divergences as the dollar hit new lows.
US Dollar Sees Bullish Divergences At Recent Lows
Suggesting Bear Market Rally May Be Unleashed
(Click to enlarge)
GOLD: What To Watch
When it comes to the price of gold, it will be interesting to see how gold trades during a countertrend rally in the US dollar. Countertrend rallies in bear markets tend to be short-lived and violent.
Meanwhile, if gold can remain in a trading range close to the breakout high near $1,900-$1,920, that would be a bullish consolidation of recent gains. Nevertheless, gold is in a secular bull market and prices will be much higher over time regardless of volatility.
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