USD Gold correlation breaking down right now.

[Hydrogen]

For some time, I've been talking about gold and the dollar relationship. The $ topping, rolling over and this being a trigger for gold.

Well, that's not fully happened, yet. The dollar is still on a relatively bullish trend. But there's a plethora of other problems with a strong $for emerging markets and China in particular. When it breaks, and falls it will also cause massive domestic inflation in the US but also send gold much higher.

And there's another factor... The long term inverse 1:1 Dollar-Gold correlation.

Whereby, in principle, if the value of the dollar ( in the DYX ) goes up then gold goes down, logically, in equal measure. This creates a typically 'fractal' pattern in the dollar-gold chart. As Seen in the first image.

Gold dollar long term is a fractal pattern

However, something has broken down in the financial system... At some point end of November / December ( the date that I kindly flagged a in September for Freddie, GimPlode and that most subtle of LSE trolls, It's South Here - who get's the special MMT prize - Most Manipulative Twunt)

Anyhow back to the data... See the second Gold-$ chart.. Notice the variance between the two blue lines, that's occurred in this chart since October (just the past 60 days). The gold trend line (blue) is NOW much, much steeper than the $ trend line.

Dollar Gold correlation breaking down past 60 days

The Chart indicates gold has risen 8.15% and the USD has fallen by 3.87%. A 4.28% variance. Basically, there's a correlation, until there's not.

BLEEPERS...!! FACT: The USD-Au correlation has now official broken, and increasingly so. The market has spoken... the system ... err... the financial computer just said (Blankety Blank Buzzer sound) ... "No". That is TELLING you something.

This is why gold stocks continue to rise now even on relative weak days for gold - the buyers just keep coming... GDXJ up 43% from the late September lows. The market knows! Gold is sniffing something…

If this breakdown is temporary, then that's one thing... but it could signal something else... potentially an incoming credit event in the US.

AND.... when the US dollar finally rolls over - which will happen - that is going to send the gold price into Orbit.. if the correlation has broken down the relative strength of gold is much much higher than it was. Ie Rocket Juice for Gold...

For the USD to break it's bullish trend it has to go under 103.2 on the DXY.

When that happens it's

And sweet jesus today we actually have GOLD and the USD rising together.....

Today gold and USD rise together... boom

I rest my case. Gimp.

[Hydrogen]

And again... bigger relative move in gold than US$

[Aiming2please]

Currently 103.2 on the DXY

[Costa]

On the daily there is a Bullish BAT, and trading just below the HOP today. November last year saw the construction of a complex AmpRSI structure which suggested consolidation ahead and that happened but whats really interesting is this now appears to be breaking down.

So...

Zoomed out on the time frame. Look at 101.42 - 102.010 as possible support zone.

There is also a 'daily' pending bullish Crab.

Charts are below...

Weekly.

Daily

[Hydrogen]

Yes really interesting juncture now.

We’re just below trade and trend in the DXY at 102.85 and gold is at 6-8month highs…

There’s a small chance DXY could bounce and recover trend, but it’s looking unlikely now… if 103.2 becomes resistance…We have lift off, I think.

Though god knows exactly where things land, if it blows up due to a credit type event.

A lot of data to come this week with Powell and the CPI report which often slams gold…

I’m pretty certain The Fed will be more hawkish this week to try Crush the stock market further… to get inflation lower…

Market is universally expecting a lower US inflation print.
But … What’s going to happen if it’s a higher print than expected …?

So one way or the other DYX trend breakdown should be confirmed….

[Aiming2please]

What’s your thoughts on today Hydrogen getting interesting now right?

[Hydrogen]

CPI lower (and hitting expectations) was a boon today. CPI at 6.5% is still terrible for citizens paying the whopping new inflation tax… and while 6.5 is hideous and slightly less bad than 8% inflation, it’s certainly not good news for stocks.

Also of note , Bullard of the FED , went on record earlier today saying it’s going to take 2 years to get inflation back down to 2pc. Err right. That’s also bad.

Those words are great for gold - ie it probably means negative real interest rates for longer - bad for US tech/growth stocks ( and bonds prices) in the near term.

But What if they can’t easily get inflation back to 2%? In 70s there were two waves lasting 2-3 year each

Nevertheless we’re having a “slightly less bad than awful is good rally” in the Nasdaq but the dollar DYX dropping into 101 also of note .

Looking very positive for gold imo.

No coincidence, therefore, we’ve seen some whopping trades go through at 8.7p this week and some seriously huge volume at ggp today. Slightly bizarre, but apparently, very big buyers can hold the price until orders are filled ( if they have direct market access). So basically you get JPM to do your bidding, whilst having £8m to drop on GgP stock you get the best possible deal.

Obviously this is not a free and fair market at GGP but hey ho buyers are buying!

And the great rotation continues

[Aiming2please]

Great to read your post Hydrogen keep them coming.

[Hydrogen]

This is looking really hot now...

[Hydrogen]

The yield curve inversion getting worse and bone chilling cold now ...

https://twitter.com/JeffSnider_AIP/stat ... 2957613061

Jeffrey P. Snider
@JeffSnider_AIP
Seriously, how much more of this does everyone need?

We aren't just talking about any old recession any longer. We already have that, it appears. Curves continue to look ahead at an even uglier and increasingly near future.

[Hydrogen]

The crocodile's mouth is getting wider and bigger ...