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Gold and U.S. Dollar: Strange Bedfellows Lately


Since early November, when spot Gold hit its multi-year low at $1131.85, it has climbed to $1282, or 13%, while over the same timeframe, the Dollar Index (DXY) has climbed 7%.

Usually, the direction of Gold vis-a-vis the direction of the U.S. Dollar is inversely related, but for over 8 weeks now, both Gold and the DXY have traveled together to the upside.

My sense is that both Gold and the DXY are deriving flight-to-safety strength from the same fears and uncertainties within an unprecedented period of super-low Treasury Yield.

Whatever the underlying reasons, let's notice that Gold price action for the past 18 months has carved out a potentially powerful base/accumulation pattern that points to much higher prices in the weeks and months ahead.

Imagine what the Gold trajectory might look like if, and when, the U.S. Dollar enters a period of correction (weakness)?

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