Gold Forecast: While The Dollar Rests, Is It Time For Gold To Rise And Shine?

Practically everything that I wrote yesterday either happened in tune with that or it remains up-to-date, so today’s technical part will be rather brief.

In short, gold reversed yesterday’s decline after almost touching its previous 2022 lows, and at the same time, it practically erased the entire war-tension-based rally – just like it was supposed to.

Gold ended the day only $5.80 higher, but the important thing is that it reversed at all. Gold’s RSI also bounced off the 30 level, which can be viewed as a buy signal on its own.

Junior miners were up by almost 1% yesterday, about 3 times more than gold. They continue to show strength, and our long positions (that became profitable almost immediately) are getting more profitable also in today’s early trading as the GDXJ is up in London trading.

In yesterday’s analysis, I wrote that the S&P 500 invalidated its head and shoulders pattern on an intraday basis, and even though it declined very modestly yesterday, it’s up in a clear manner in today’s pre-market trading.

This means that the odds of a short-term rally in the following days have greatly increased. This makes the current long position in junior mining stocks even more justified.

Also, as far as the USD Index is concerned, I previously wrote the following:

The higher of the recent highs is at 103.96 right now, so if the analogy to 2014 is to remain intact, the USD Index could now top at close to 104.5 or even 105.

That’s exactly what happened recently. On Thursday, the USD Index moved to 104.96, and in Friday’s trading it rallied above 105 (to 105.065) and it invalidated the breakout above this level - which is in perfect tune with what I wrote above. Consequently, it seems that we could now see a move to about 103-103.5, after which USD’s rally could continue.

The opposite is likely to take place in the precious metals sector. Gold, silver, and mining stocks are likely to rally in the near term, and then – after topping at higher levels – their decline would continue.

The USD Index futures moved to about 103.7 in today’s pre-market trading (so far), so you might be wondering if the bottom is in or about to be, and therefore, will gold stop rallying.

Please note that it’s possible that the USD Index bottoms shortly in the 103-103.5 range but then continues to trade sideways for a few days, while gold continues to rally. In fact, that’s what happened in late 2014. Consequently, what we saw so far today doesn’t imply that gold’s, silver’s, or miners’ rallies are over.

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Thank you.

Przemyslaw Radomski, CFA
Founder, Editor-in-chief
Sunshine Profits - Effective Investments through Diligence and Care

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All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

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