Is Reversal Top in Gold Indicating Bottom in U.S. Dollar?

Lower T-Bond and T-Note markets along with the divergence from theDollar by gold today could be indicating that the trend in the Dollaris getting ready to turn. Watch to see if gold follows through to thedownside after today’s closing price reversal top.

The U.S. Dollar closed lower across the board with no sign of a let-up in this trend. Last week’s mini rally triggered by Bernanke’s comments about a tighter monetary policy have been erased.

Today’s FOMC Minutes Report indicated that the Fed was interested in keeping interest rates low and expanding the mortgage buyback program. They cited “the cost of the economy turning out to be weaker than anticipated could be relatively high.” This comment means the Fed doesn’t want to raise rates or end stimulus until they are certain the recovery is sticking. This was basically another way to restate what Bernanke said last week when he commented that the Fed would move toward a tight monetary policy once the economy was on solid ground. The U.S. Dollar spiked lower on the news as some traders have been speculating that the Fed was looking to put an end to its easy money programs.

Intervention by other central banks to control the rise in their currencies may be the only way to combat the fall in the Dollar. The New Zealand, Japanese, Canadian and Euro Zone central banks have expressed the most concerns about the rapid rise in their currencies. Can a concerted intervention be in the offing in the near future to boost the Dollar?

Lower T-Bond and T-Note markets along with the divergence from the Dollar by gold today could be indicating that the trend in the Dollar is getting ready to turn. Watch to see if gold follows through to the downside after today’s closing price reversal top.

James A. Hyerczyk has been actively involved in the futures markets since 1982. He has worked in various capacities within the futures industry from technical analyst to commodity trading advisor. Using W. D. Gann Theory as his core methodology, Mr. Hyerczyk incorporates combinations of pattern, price and time to develop his daily, weekly and monthly analysis. His firm, J.A.H. Research and Trading publishes The Forex Pattern Price Time Report... More

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