The strength in the US Dollar is continuing to batter gold, ( not to mention a whole host of commodity markets) as the inverse connection between the two asserts itself.
Not only that, but continued outflows from the gold ETF, GLD and declining inflation expectations, are all undercutting the price of the yellow metal.
Here is a look at the US Dollar chart on an intermediate term. Note that the greenback is still trading within a 21 month long trading range but is approaching the upper portion of that range. Light resistance is near today's session high. Above that is the 85 level.
The RSI (shown below) is near 80 and at the highest level in over 4 years! Clearly this is one strong market at the moment.
Helping to further aid the Dollar today is the news that polling data out of Scotland shows a majority there now in favor of independence. This is pressuring the British Pound, which is one of the currencies that make up the basket comprising the USDX.
It is therefore rather humorous to continue reading the various breathless emails in my box detailing one more nail in the coffin of the US Dollar. All the while the currency marches relentlessly higher! One wonders how many of these people peddling this stuff ever bother to look at a simple price chart.
Needless to say, the strong Dollar is making for an ugly looking gold chart and ugly looking gold mining share charts as well.
The volatile juniors are still up for the year but the chart is currently negative with the index trading below all of its major moving averages and with various technical indicators all in clear bearish modes. The index looks to be on track for testing the bottom of its range near 32.
The HUI failed to hold the gap on the chart and is also in a bearish posture at the moment.
Gold bulls had better hope psychological support at $1250 holds or gold will revisit key support at $1240.
The Euro continues to fail at one support level after another and looks like it is heading to 1.2800. The weaker the Euro gets, the more difficulty gold is going to have.
On the grain front, we are watching the current forecast models for indications of the upcoming frost event see whether or not temps drop as low as were originally expected late last week. Today's models are showing the frost line further north but traders are still a bit jumpy and will be until the event comes and goes or the forecasts showing something more conclusive and less threatening. This afternoon's crop condition reports are expected to show phenomenal numbers so the grain bulls are praying for an early killing frost to bail them out.
I will try to get something up later after the USDA gives us those numbers.
"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat
Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput
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