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Dollar Index Pivots to Upside, while Gold Holds its Own


What now for the relationship between the US Dollar (DXY) and Gold?

The DXY looks like it made a significant low at 78.91 on May 8, just as it peered into the abyss beneath a 2-1/2 year support line.

Since then, the DXY has climbed to 80.15/20, up 1.6% from the May low, as the DXY price structure pushes up against key multi-month resistance at 80.30/40, which includes a down-sloping 200-Day EMA, now at 80.42.

If 80.40 is hurdled and sustained, which no doubt will be a reflection of a weaker EURO (in reaction to the forthcoming June 5 ECB Meeting), as well as a weaker YEN, the DXY should be off to the races on the upside.

Meanwhile, Gold, too, looks like it ended a meaningful near-term pullback at its April 24 low of $1268.39, and despite the strength of the US Dollar, has managed to form a small, but potentially significant, bottoming pattern that should propel price towards a test of its slightly down-sloping 200-Day EMA at $1319.

What perception, crisis, or uncertainty might trigger an up-spike in Gold into the headwinds of a stronger Dollar is anyone's guess, but unless, and until, $1268.39 is violated, we should not rule out such a scenario.

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