For those whom have followed my post on Gold, the below analysis would be extremely useful for us to consider. I will be covering the past year’s correlation of Gold vs USD and the current strength of USD.
Gold vs USD correlation (Updated 16 Dec 2018):
- Historically Gold and USD are having an inverse relationship
- However, we can see that this is starting to change since 2016.
- Referring to the chart, we can see that Gold was lowest in Dec 2015 at 1,046 where USD Index peak at range of 104
- Gold was at 1,246 when USD Index peak again at range of 104 in Oct 2016 this shows the first sign where Gold is not 100% correlated with USD
- In 2018, while we can see that Gold has retraced back to 1,160, it has started to go up since Aug 2018 where USD is going up.
- In conclusion, while we are seeing USD going up in the immediate term, gold might not go down to the same extent.
- In fact, the could be a high possibility for Gold to spike up when USD reaches the peak of range of 104 and start to reverse.
Strength of USD (Updated 16 Dec 2018):
- Basis short term chart, USD Index is showing signs of bullishness
- Technical analysis indicators are showing early signs of bullishness in RSI, MACD & Oscillation. However, confirmation is needed on the same.
- However, do take note of the 97.84 level where it seems to be a strong resistance basis Fibonacci 61.8% resistance line.
- The confirmation of bullish trend would be the event where USD Index break up above 97.84.
- It would be interesting to monitor how USD Index moves in the upcoming week.