advertising banner for bullion vault

Could FX Market Signal Upward Move in Gold?

   SHARE THIS POST:

It is important to use multi-asset analysis for ongoing clues to movement.

Christopher-LemieuxSMBullion.Directory precious metals analysis 13 October, 2014
By Christopher Lemieux

Senior FX and Commodities Analyst at FX Analytics

The foreign exchange market could be signaling an upward move for gold. The US dollar/Swiss Franc (USDCHF) is a proxy for the US dollar index (DX), thus the currency pair has an inverted relationship with gold. And it seems as the dollar has hit an inflection point as mentioned previously. 

dx_usdchf_proxy

Market participants look at the US dollar as a “safe haven.” A safe haven backed by a $17 trillion dollar deficit.

the gold forecast banner

Nevertheless, we must take into account that the Federal Reserve is now looking to weaken the dollar in order to spur inflation (a plus for gold). Fed Chair Janet Yellen said it herself, and the FOMC minutes signaled that policy will continue to accommodate. Don’t fight the Fed, right? This was the moniker going back into the unrealistic rise in equities.

Well, it goes both ways. The BoE, BoJ and ECB have taken a steady path of talking and printing their respective currencies lower. This plays into a bullish case for gold.

The intraday chart on USDCHF is showing weakness underneath a descending trend line created from the high, while gold prices look to have developed an ascending trend in relation.

Gold prices are seeing minor resistance at current levels, but price appreciation is on the verge of breaking through a wedge; and, this could ignite more upside in the short-term.

If price action cannot close above the USDCHF resistance, gold will trend higher.

The USDCHF will see demand zone lower at .9470/90. Resistance in gold is found  at $1,236. A close above these levels will target the 50-day EMA for the next upside target.

usdchf_gold_overlay_10_13_14

creative commons Attribution NoDerivs This license allows for redistribution of this article, commercial and non-commercial, as long as it is passed along unchanged and in whole, with credit to Bullion.Directory, linking to the original article.

Bullion.Directory or anyone involved with Bullion.Directory will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading in precious metals. Bullion.Directory advises you to always consult with a qualified and registered specialist advisor before investing in precious metals.

prize draw details

Leave a Reply



  I accept your GDPR / Data Protection Policies

Bullion Dealer of the Year Vote Results Now LIVE      SEE RESULTS