Dollar on the brink.

My last post about gold prices predicted a delay in gold prices dropping and that prediction turned out to be accurate. This post compares the value of the dollar and gold prices. Notice that both are on the brink of potentially big moves; gold moving up and the dollar moving down. There are non-confirmations though that makes me want to hedge. Notice that gold had more bullish days in July and August than bearish days, yet the 50 DMA actually turned down in August while the 200 DMA kept moving up. This means that the long-term bias in gold is up, whereas the short-term move is still hesitant. The positive value of the short term MACD (the red line being above the black line) shows resistance against a down move. The big move in gold yesterday (up $13 an ounce) is also a bullish sign. If gold moves above $968/oz then it will be in a definite up pattern.

Gold and oil are sold in dollars. So, the price moves in all three are related. Oil closed at $74/bbl Friday, so both gold and oil were up and the dollar was down. The MACD for the dollar is still positive so it resists downward movement. Much of this resistance is due to the up moves in the dollar in the early days of August, which led some people to believe that the dollar hit its major low. Indeed, this last week saw the dollar slide every day, yet it is still above the low it reached at the end of July. This sets up a classical confrontation. Look at the dollar chart and you see that the dollar sank to 77.6 intraday and rebounded from there. If the dollar retests this level and sinks below than all three factors (gold, oil and dollar) will be in sinc, confirming not only inflation, but coming higher oil and gold prices. Just as an aside, George Soros made a big bet on oil. Sheer coincidence, of course.