Gold is severely overbought and trades above its 5 year average at 1262.19. Gold is correct to trade above its 5 year average alongside DXY, which also trades above its 5 year average at 95.01.
The S&P's also trades above its 5 year average at 2405.44.
Gold and DXY are historic risk-off assets and neither can trade alongside the S&P, a risk-on asset risk. Gold and DXY must break their 5 year averages or remain in current position while the S&P breaks its 5 year average.
If markets are viewed correctly from a safe bond versus risk yield perspective, then DXY and Gold represent the safety of a bond price, while the S&P represents the yield side of the equation.
Both Gold and DXY generally have negative correlations to the S&P's. Gold and DXY generally negatively correlate to most currencies except those few cross currency pairs as true USD pairs.
One day, the gold versus DXY versus S&P relationship will bust wide open then each financial asset will assume its correct trade position.
Gold from current 1475.76 must trade lower to a minimum 1350.00s. Gold achieves 1350.00 targets by breaks lower at 1471.94, 1418.39 then 1387.87, 1376.39 and 1359.45. Severely overbought gold translates as a short only trade strategy.
The price of gold is currently unable to make big moves. This can be seen in the slow daily price grinds.
Gold is overbought with prices located from 1553.97 to 1617.76.
From a 24 hour perspective, gold factored to interest rates reveals the current top at least for today at exactly 1600.00.
24-hour gold trade: long at 1468.38 to target 1484.32 on a break of 1478.43. Any price above 1484.32 is a bonus trade for shorts. Any price below 1468.38 is a bonus to longs.
For those interested in Market structure:.
True safe assets include bonds, gold, silver, DXY and VIX versus stock markets, yields, commodities and currencies except for classic currency cross pairs considered DXY pairs as follows EUR/AUD, EUR/GBP, USD/CAD, GBP/AUD, GBP/NZD, EUR/NZD, and EUR/CAD.
Brian Twomey