The Dollar Index continues to test resistance at 95.
Mohammed El-Erian believes the Dollar is underpriced:
“…the dollar index is now at a 2018 high and, IMO, markets as a whole are yet to price fully the growth and policy differentials that favor the US over many other countries.”
Expect another test of short-term support at 93.20 but respect is likely and breakout above 95 would signal another advance.
A strong Dollar would suggest weaker gold prices (in Dollars). Spot gold breached support at $1280/ounce, warning of a test of primary support between $1240 and $1250. Trend Index peaks below zero flag selling pressure.
Australian gold stocks face a different set of drivers. The strong greenback weakened the Aussie Dollar, breach of primary support at 75 warning of a decline to 70 US cents. A long tail on the latest candle suggests a continuing arm-wrestle between buyers and sellers. But the Trend Index peak below zero indicates, in the medium-term, that sellers outweigh buyers.
Buoyed by a weaker Aussie Dollar, the All Ordinaries Gold Index is rallying to test resistance at 5250. Breakout would signal another advance but retracement is likely to first test support at the rising trendline.
