In our most recent article on gold, USD and Euro Indexes we wrote that the outlook for the yellow metal was bearish just as the outlook for the Euro Index and U.S. Dollar Index was bullish. At this time – since all of the above-mentioned markets moved in the opposite way – you might be wondering if we are sticking to the above analysis.
The Fed stimulus helped push the S&P 500 up as much as 153% from its March 2009 low. Will they keep rallying? Let's take a closer look at the charts to find out what the current situation in the general stock market is.
Without a doubt, the recent weeks were tough for the U.S. currency. What has happened with gold? After a rally to over $1,347 the yellow metal declined below $1,300 per ounce and then pulled back to $1,320.
Interestingly yesterday, the September US dollar index was up 0.255 point to 81.425, yet gold prices continued to climb as investors continue to buy gold. Many analysts are now asking if the yellow metal is breaking its negative correlation with the reserve currency.
The long-term outlook for the U.S. Dollar Index is now bullish, and this could damage the precious metals markets, at least temporarily. The very long-term correlations between the dollar and the precious metals have been pretty non-existent.