Gold Is Very Strong

As a rule, when the price of gold goes up, the US dollar index goes down. And vice versa. To make things simpler, let me show the US dollar index in its inverted version. In such a case when the price of gold goes up, the inverted US dollar index also goes up. And vice versa.

Now look at the two charts below:

 

The upper panel shows the price of gold and the lower panel shows the inverted US dollar index. 

Applying the basic rule,  both measures should go in tandem. It means that the price of gold should have gone below the point A in the way the inverted US dollar has gone below the point B. However, gold is still above the point A. 

In my opinion, it is an indication of the gold's strength, which is a bullish message for gold bugs.

Disclaimer: This article is not an investment advice. I am not a registered investment advisor. Under no circumstances should any content from here be used or interpreted as a recommendation for ...

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