Based on the recent movements of the dollar and the S&P 500, the situation of the gold market can also be assessed. Did we just see the top?
In yesterday’s analysis, I wrote the following about the US DollarI ndex:
For example, the USD Index could decline to its strong support level at the 38.2% Fibonacci retracement and the August 2022 low as well as the May 2022 high. Such a move would likely imply the RSI at about 30, which would be a crystal-clear signal for many traders that the bottom is in.
To clarify, if that happened, the USD Index would be as oversold from a short-term point of view, as it was at its 2021 bottom – when it was trading at about 90.
Here’s what happened:
The USDX moved very close to the above-mentioned support levels, and it moved back up before the end of the day. The only reason that the RSI didn’t move to 30 is because the USDX declined only on an intraday basis. This means that from the RSI’s point of view, the situation is only “very bullish,” not extremely so. However, given the reversal nature of yesterday’s session, the outlook just became even more bullish, and it seems to me that the bottom is in.
This means that the top in the precious metals market is also likely in or at hand, especially given the S&P 500’s inability to break through its own 38.2% Fibonacci retracement.
I’ll explain more in the video below: