Many times in the past, the situation in the U.S. dollar and the euro gave us important clues about future precious metals’ moves. Therefore, today we’ll examine the U.S. Dollar Index and the Euro Index to see if there’s anything on the horizon that could drive the precious metal market higher or lower in the near future.
The rally in stocks seems to have triggered a decline in the precious metals sector and the following stocks’ moves could further contribute to metals’ performance. Will the stock indices keep rallying?
When conventional investments perform poorly, it facilitates growing interest in alternatives like gold. This is why the two markets are often negatively correlated. History shows that declines in gold often end when the stock market peaks.
The correlations between gold and the general stock market reminded us of a question regarding whether we felt gold was starting to trade along with the stock market. This may seem to be true this week, but we doubt this will last.
In an environment of unprecedented accommodation, even a hint that the money printing will be curtailed can act like a tsunami on financial markets. Despite the headwinds, there are markets where traders can find refuge, an oasis where commodity-specific fundamentals prevail.