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July 26, 2005
Dollar Power
Despite a revaluation of the Yuan, the US Dollar Index remains strong overall and the current trading range looks like a pennant. After an advance, these are bullish continuation patterns and a break above the upper trendline (90.5) would signal a continuation of the advance.
A move below the pennant low (88) would be negative, but not enough to reverse the current uptrend. For that, I would wait for a break below the March trendline and June low. Even though the relationship is under challenge, I would view Dollar strength as bearish for gold.
Posted by Arthur B. Hill at July 26, 2005 07:35 AM