Precious Metals and the Dollar
September 24th, 2010WARNING: This is not a recommendation to buy, sell or hold any financial instrument.
The U.S. Dollar Index breach of 79.507 sets up the downside possibility of 77 to 76.5.
On the weekly chart, the DX could be grinding out the mother of all descending triangles, but this pattern goes back to mid 2008 and shows no sign of breaking anytime soon. What this means is that I don’t see the dollar going to make any fresh lows for now. So, short term, look for some more downside on the DX (upside on the metals), but watch out around that 77 to 76.5 zone on the DX. There’s a pivot low there and the possibility of the lower leg of the descending triangle overlapping that pivot. In other words, from around 77, the DX could rally for weeks or months.
This descending triangle is (big picture) bearish, but it’s not ready yet.
Finally, if that INDU gets shilled up over 11 grand again, it’ll be DIA puts for daddy.
Come on Maria, dear, I need to buy those puts a bit higher.
Via: Bloomberg:
Gold futures rose to a record $1,300 an ounce in New York as investors sought a protection of wealth and an alternative to a weakening dollar. Bullion traded at an all-time in London and silver reached the highest price since 1980.
The dollar headed for a weekly drop against the euro on concern the Federal Reserve is moving closer to boosting debt purchases, while European equities declined. Gold, which usually moves inversely to the greenback, advanced to a record for the fourth day this week. Silver, which is used in industrial applications, headed for a fifth weekly advance in London.
