Commodity Trade Mantra

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A Closer Look at Gold & the US Dollar - Do They Tell us Something?

Commodities are priced in dollars. Global trade is done in dollars. And the majority of international funding is in USD. The dollar is important. Dollar trends impact markets and assets around the world in various ways. Hence why the dollar is the fulcrum. But if the dollar is the fulcrum then gold is the foundation on which that fulcrum sits. Now let’s take a closer look & see if they tell us anything.

Gold Plated Yuan & Cryptocurrencies will soon attack the US Dollar

Some 70 hedge funds have bought bitcoin. The crypto currency’s price volatility provide something traditional markets are lacking…action. China has wanted to unshackle itself from the dollar for a long time and now they’re giving yuan-denominated gold contracts a third try. The dollar will soon be under attack: both from a gold-plated yuan and the cryptocurrencies.

King Dollar Doomed - Massive Collapse Looms as Rally Fizzles, Rush to Gold

Countries around the world would soon stop trading commodities like oil in the US dollar, something we’re already seeing with China, Russia, Iran, and Venezuela, all of which are preparing non-dollar, gold-backed mechanisms of exchange. After a near term bounce, the US dollar is going to be very weak… and then it’s going to go much, much lower while you see a massive rush for gold.

Here's The Fundamental That Matters Most To The Price Of Gold

There are the positive geopolitical fundamentals & positive economic fundamentals (that we all know about) for the price of gold. In relative terms, none of these fundamentals count. There is one more important fundamental for the price of gold. Not only is it the most important fundamental, but it involves a variable which dwarfs all other fundamentals in magnitude — combined.

Gold and Silver Test Key Support Zones on Dollar Bounce

Gold and silver currently find themselves in the red for the month of Sept. But the dollar could very easily weaken again. If buyers manage to defend their ground around $1,276 in gold & $16.80 in silver & they go on to rise back, then the bullish trend would re-establish. Also a correction in US stock markets, tighter monetary conditions & raised geopolitical risks could boost the appetite for gold and silver.

Dollar Rebounds while the Yen starts it's Descend

On Sept 19th 2017, the dollar reached its highest level since July last year. On the very day that the dollar began to ascend, and the yen to descend, once more, the Trump Administration put the dollar into doubt again with Trump’s aggressive speech against North Korea at the UN. This is likely to destabilize the dollar once more and to cause traders to turn to the yen as a more reliable option.

Unwise to be Short on Gold or Silver as Dollar & Stock Market Crash Loom Large

Gold is already up by almost 15% so far in 2017, fueled by the falling dollar. A weak dollar, coupled with a technical breakout, should continue to push gold prices higher, possibly toward $1,600. A major international banking crisis is inevitable & likely to occur fairly soon. A stock market crash is likely to push many banks to that point of failure. So it would be very unwise to be short gold or silver now.

Is a US Dollar Rally Imminent or will Gold and Silver Continue Rising?

The past three weeks have seen a sharp increase in Commercial long liquidation coupled with accelerated shorting but the aggregate number of shorts is still well below the level seen at major tops in the summer of 2016 and with gold approaching U.S.$1,400 per ounce. The risk in this assumption that the U.S. Dollar index ($USD) is about to stage a reversal to the upside, forcing the algo’s to sell gold.

Gold Prices may be Slow to Rise, but the Direction seems Completely Certain

Gold is challenging the $1300 level for the third time this year. If it breaks upwards out of this consolidation phase convincingly, it could be an important event, signalling a dollar that will continue to weaken. The factors driving the dollar lower are several & disparate. Here is a summary of these trends & explains why the consequence appear certain to drive gold, priced in dollars, much higher.

Dollar nowhere near Bottoming out, Gold nowhere near Topping out

Despite two rate hikes & impending balance sheet reduction, the 10-year yield has moved 15% lower since early March while USD has been weakening, both contrary to many forecasts. While USD has been falling, Gold has rallied over $200 since December 2015 to its current mark at 1,276.70. Now there are many potential catalysts to move make the 20%+ seen in Gold look small.

Supremacy of US Dollar as Global Reserve Currency is Doomed

A relief rally is likely in the US dollar, although that doesn’t mean the rally will get very far, nor that the dollar’s downtrend is done. While several indicators are suggesting that it will take at least a breather here, if it does break down the consequences for the dollar are likely to be dire—and this could be the message of the super bullish gold and silver.

Dollar's Long-term Downtrend will have Positive Impact on Gold Prices

The charts for the dollar index continue to look grim. On the 8-month chart we can see it dropping away beneath a parabolic downtrend that is accelerating to the downside. If this parabolic downtrend continues to force the dollar lower it should have a positive impact on the gold price, although it hasn’t thus far. Further significant weakness in the dollar should of course be bullish for gold and silver.

China-Saudi deal "Yuan for Oil," Another step to the Grave for the Dollar

As China imports more & more oil, the idea of paying for oil in yuan instead of the US dollar becomes more critical. China is working on a deal to pay for Saudi oil using Chinese yuan. This effort poses a direct threat to the security of the dollar. If this China-Saudi deal happens — yuan for oil — it’s another step closer to the grave for the petrodollar, which has dominated global finance since 1974.

US Dollar Headed Significantly Lower with Lower Highs & Lower Lows

Lower highs and lower lows mean one thing — a downtrend. That’s what the US dollar is in now. This downtrend is happening despite anticipated rate hikes. So maybe ask yourself, what if the Fed doesn’t hike rates? What will the US dollar do then? We’ve had some good news on consumer confidence and manufacturing. But that’s the icing on a pretty disappointing economic cake.

Stronger Demand & Weaker US Dollar To Push Gold Prices Higher

The peaking of US real yields and the downward pressure building on the US dollar are positives for gold prices. Meanwhile, we expect global jewellery demand & investor demand to pick up in line with the overall improvement in the global economy and in gold demand centres in particular. It would be the first time in five years that demand will be higher than supply.

While the World Binges on US Dollar, Gold Awaits the Purge

The best thing to do is continue carrying a piece of your assets in Gold and Silver to hedge when (not if) the USD falls. Gold will be easily north of $2,000 soon after the world is done converting its currency risk into USD. Then they will be left holding the bag as our Fed pulls the plug. and then you will be buying dips at $1800 and selling rallies at $2500.

The Correlation between US Dollar & Commodities is now Broken

Commodity prices have traded in a strong inverse relationship with the US dollar over the past decade or so, but this relationship broke down in late 2016 and the breakdown looks here to stay. Commodities generated strong returns in the Q4 of 2016 with the Goldman Sachs Commodity Index moving 9% higher despite a stronger dollar which gained about 7% against major currencies.

Inflation, US Dollar, Gold & the Interest Rate Action by the Fed

The evidence of inflation is starting to emerge. When will the markets begin to see that the Fed is not serious about nipping inflation in the bud? We don’t know the answer but any rate increase could be the one that looks too timid and too late compared to the inflation data. As the markets begin to take note, the dollar will weaken and gold will once again behave like an inflation hedge.

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