The strengthening US dollar in the Forex market certainly has played a certain amount of part two the selloff in gold, as it takes less of those US dollars to buy gold. By breaking through the $1275 level, we have seen significant support broken through, but as I record this it looks as if we are trying to bounce a bit, and therefore recover much of the losses. Quite frankly, as I record this video we are only down 0.25%, so it’s hardly what I would call some type of meltdown. I believe that the market will continue to churn back and forth as we worry about the trade tariffs between the United States and China.
It’s likely that this market will continue to struggle to keep gains, but I think that we may find the market trying to form some type of bottoming pattern eventually. By breaking through the uptrend line from the previous week, I believe that is a much more telling signal than anything else. I would be a seller of rallies, at least until we form some type of longer-term bottoming pattern, at the very least a daily hammer or better. Overall, I think that the US dollar will continue to strengthen as long as there are trade tensions between the US and China, as people running towards treasuries will provide a natural lift for that currency. However, if trade tensions calm down, that will put pressure on the US dollar, and therefore I would look for gold to rally under those conditions.