What is going on with gold and DXY? Precious metals are sustaining the peripheral damage of a burgeoning risk-on play associated with thoughts of economic expansion via implied stability. I have not read fine print on the subject and that is on purpose. I learned to trade futures with precious metals and like the physical stuff. It seemed right to regard others' analysis but have stubbornly resisted that in the years since. Everyone was talking their book. They say history rhymes, but gold and equities - both beneficiaries of loose monetary policy - are again diverging. What is more, gold is following along with DXY weakness. We have the FOMC meeting in mid-December, but gold doesn't care today. It has gone off the ranch in search of that place where the emotional, futures-market driven price meets the undiscovered reset price for common-sense safety allocation. That anxiety-provoking set of conflicts can be risky on certain timeframes. Dangerous like a fickle heart with pretty eyes.
Precious metal price was at least partly associated with wide-ranging global chaos that many seemed not to appreciate -- a thing we just narrowly avoided. We can expect some erratic behavior as traders come to terms with things. It's sort of like the first miles of highway right after you avoid being taken out by a daydreamer who wasn't looking. Stunned disbelief puts you in a different kind of danger. Those notions of a tepid commodity boom associated with a run in cyclicals would offer some support -- but we are still swerving. The world outside our own throwaway society takes gold seriously. We sometimes treat the stuff like the unnoticed, seemingly disposable lives at risk in the pandemic. Today's equity session is being driven by big tech. That has been the retail trader's idea of a haven lately. But given our recent reprieve - and the vaccines and rush to cyclicals - there are two things everyone is asking about gold: where is value and how far can we overshoot it? That is partly a technical question that demands continued scrutiny of the DXY chart. It also might be a question of dissonant chaos within an outgoing administration that boasts of current equity market levels while stirring chaos here and overseas. Other than some special activities, national security and military leaders are wary of placating an administration that has fully revealed its character in the last few weeks. But what little gifts will they try to leave history anyway? All that is for not as I’m more than unsure of the near-term trajectory of gold and therefore positioned flat. I would defer to others here.
