The USD Index once again didn’t do much. Yet again, precious metals showed weakness regardless thereof. Gold had no major reason to decline, and it did much more than just that. Gold broke below the rising support line based on the November and January lows. That’s very important, because mining stocks had broken below their own rising support line earlier this week. Given today’s pre-market move lower in gold and silver it seems that these moves are far from accidental. Conversely, they change a lot.

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Precious metals bearish reactions toward this week’s USD Index movement continued this week. The USD Index did almost nothing while gold, silver, and mining stocks declined. And the latter confirmed their recent underperformance of gold that we discussed yesterday. Gold stocks also broke below their rising support line, but gold didn’t. Miners seem to be leading gold lower, but can’t since yesterday’s breakdown was relatively small. The question is, can it be trusted?

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Just like it was the case on Monday, gold and silver haven’t done much yesterday either, but we saw some interesting action in the miners – they formed a bullish reversal after testing the rising support line. The performance of the USD Index provides us with clues as well. It declined and this should have triggered a move higher in the metals and miners. It didn’t. What really happened?

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Gold and silver haven’t done much yesterday, but the mining stocks declined more visibly than the underlying metals. After outperforming on a short-term basis (and only in this way), miners are back in the underperformance mode. They remain above their January high, though, so the breakout above it was not invalidated, which has bullish implications. Which factor is the real one, and which one is the faker? Which way will miners move next?

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Friday’s session provided us with some clues that made us reevaluate our actions. Some elements of the picture changed and some did not. The picture cleared and remained muddied at the same time. Yet, the takeouts are worthwhile. Let’s jump right in to take on the riddles and dutifully share the lessons.

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