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Gold down Ignores Weakness In The USD

احدث اجدد واروع واجمل واشيك Gold down Ignores Weakness In The USD

It was a mixed bag for stocks as the Dow and S&P traded higher while the Nasdaq continues to sell-off. We are having some unusual action in the general indices now. The Dow continues to close at new multi year highs yet the Nasdaq has been correcting for the last few days. It's very tempting to maybe try and short the Dow and go long the Nasdaq to see if this gap closes and possibly make some money in the process.

Gold was down again today, but this time the selling wasn't that strong as the precious metal was only lower by $3 to $1,342. Still, it has yet to find a bottom even though it's been hard to find many bulls around.

The ^HUI was down another 5 points to 505, the lowest close since October. It's now only 11 points from the 200 day, I guess that could be seen as good news and bad news. Since that level should provide support, but the index is still well off its high from last month.

Gold always seems to lead the market. In late 2008, gold and gold stocks bottomed, but the major indices didn't bottom for another 4 months. If the stock market is about to correct then money could start coming back into the gold market as I don't think people are going to be buying bonds or holding cash. In other words, we might see some rotation into the gold sector over the next few weeks. I continue to expect the stock market to rise in Q1 and Q2, but it will obviously have corrections along the way. We have had a good run so we could very well start one now. The main theme I have been trying to get across since I started this site is all assets will be going up in value over the next few years. But there will still be corrections.

The US Dollar was lower again, breaking some minor support. Gold ignored this move though, but if the USD keeps falling then eventually gold will take notice. I'm hoping that this week was the final washout for gold, even though a lot of people are calling for more downside. We have two scenarios. One, gold keeps falling down to the 200 day. With the ^HUI near its 200 day I would be very curious how the index would react to this. Like I keep saying, there is a major imbalance. Two, gold bottoms here as the ^HUI hits its 200 day. This is the most likely scenario since it seems everybody is assuming gold is going down much further. With the dollar falling that helps golds cause, and if stocks start to correct then that is even more money that will flow into the gold sector. So I'm thinking that next week we have gold and gold stocks bottoming out and the major indices topping. One thing I want to note though, when gold went under the 50 day moving average I mentioned that it's very hard to make predictions when it's between the 50 day and 200 day. You just never know where it's going to bottom. Just because it breaks the 50 day doesn't mean it's going down the the 200 day. Look at the gold chart above and you will see what I mean.

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