Both gold and the dollar were moving in a similar type of triangle pattern. As they were approaching the apex it was clear that a new trend was about to start.
Two weeks ago, gold started a breakdown, right at a time when gold miners flashed a bearish sign, leading us to conclude that gold would start a bearish trend.
However, after two weeks, gold came back and re-entered its triangle pattern again, see the first chart. That happened right on the same day when the dollar broke down, see the second chart.
The dollar needs to confirm its breakdown of today. Gold needs to confirm its false breakdown of early May.
Said differently, the dollar and gold can still go both directions. The dollar’s chart, however, looks less constructive than the one of gold. The coming weeks will be critical for both markets.
The SPDR Gold Trust ETF (NYSE:GLD) rose $0.22 (+0.18%) in premarket trading Thursday. Year-to-date, GLD has gained 9.29%, versus a 5.50% rise in the benchmark S&P 500 index during the same period.
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