The expansion of the quantitative easing by the ECB has put a renewed pressure of the greenback to go up. Mind you euro is the biggest component of the dollar basket and the QE has been hugely negative for the euro.
When the U.S. dollar goes up then naturally the commodities priced against it will go down, if all other things remains same. But, today the gold did not go down, in fact it rose. As of 3:00 PM, the dollar index was up +1.4% from yesterday’s close and the gold was also up by +0.8%. Crude Oil (West Texas), by comparison was down -2.2%. This is quite positive for the gold. It seems to be arresting its long slide and, maybe, forming a bottom.
Here is the dollar index daily chart. Today’s move is taking it to stratospheres. Last time it was so high was in November 2003.
However, the Light Crude oil is still not able to rise up from the lows. It is in danger of breaking below an up-trending bear-flag. That will be quite bearish.
On the other hand gold is breaking above long term down-trend line. Here is the weekly chart and the yellow metal is breaching the down-trend line from 2013.
The weekly chart of GLD, the SPDR Gold Shares ETF, is mirroring the futures and forming good bullish chart pattern. A break above 130 will be quite bullish.
Surely, it has few resistance levels lurking above and the daily chart highlights them.
The gold miners, GDX, have been on the rise too. But they haven’t gained much today. A break above yesterday’s high of 23.22 will resume the trend.
Randgold REsources, GOLD, is a bit stronger than the gold miners, and it also stumbled more today.