A big jump by the USD today as it closes in on its previous high of '88' is reminiscent of a spike before the final blow off. The dollar has rallied very well from 78 on the USD Index to close at 86.25 today. At the same time gold, which gained $32/0z yesterday went on to add another $17/oz to close at $857.14/oz today.
We now need to watch the dollar to see if it can surpass its previous high and go on to register a higher high, which if the inverse relationship with gold still exists would be bad for gold. However if gold were to continue to rise regardless of the dollar then we could set for a seriously good rally hopefully challenging previous all time highs. But first we still need to see gold register a higher high above $875/oz and then surpass the $925/oz hurdle.
However, despite gold heading north the stocks failed to hold their gains, spooked possibly by the DOW dropping below 8000 to close at 7,949 registering a loss of 332 points. Not a great start for the new president but in all fairness the markets are feeling the effect of The Royal Bank of Scotland falling out of bed which has hit the financials very hard.
We are disappointed that the gold producing stocks are not reflecting gold’s performance and appear to be lumped in with the broader market as they were during the sell off of 2008.
Stay on your toes and read as widely as you possibly can as these are extremely difficult times with a number of ‘norms’ being put to the test.
Have a sparkling day!
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