Gold: Driven By The US Dollar And Hampered By The S&P 500 
Monday, July 1, 2019 at 09:44PM
Gold Prices

Preamble

We recently penned an article entitled: Gold To Obliterate The $1350/Oz Resistance Level and this has certainly happened as gold recently traded as high as $1425/Oz. We also said the following:

This resistance level needs to be obliterated with some gusto and gold needs to find the traction to take out the next resistance level before making new highs. 

A lot depends now on monetary policy easing by the Federal Reserve which would weaken the dollar and due to its inverse relationship with gold, strengthen gold. 

After six years in the doldrums gold has suddenly come to life however the two main influencers are the US dollar and the S&P 500. If both of them contract at the same time it will act as a double boost for gold. Conversely, if one of them contracts and the other makes gains then gold will be both supported by one and suppressed by the other making trading rather tricky to say the least.


The US Dollar

Gold has an inverse relationship with the US dollar and tends to move in the opposite direction to it. A quick look at the charts below clearly shows the US dollar falling to its falling through its support level of 97. The reason for this was that Jay Powell, chairman of the Federal Reserve has signaled that there could be two rate cuts this year

 


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The Precious Metals sector is being driven by gold at the moment which has finally sprung to life.

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