As you know, the USD Index is one of the things that are very important in determining gold’s short-term direction – perhaps even the most important one. The USD has just closed above the previous December high and is now at the highest levels since 2006. Will the U.S. dollar’s breakout translate into a breakdown in gold?

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Gold closed the previous session more or less where it had closed in the previous days, but something much more significant happened in the USD Index. The U.S. currency moved above the previous December high. Will this breakout make gold plunge any day now?

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Yesterday’s session included the dollar’s show of strength but it didn’t really feature gold’s significant decline. Is gold simply hesitating and will reply to the dollar’s bearish signals in the coming days?

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Gold tried to rally yesterday, based on the dollar’s decline, but failed to hold these gains and ended up barely higher. That’s another day of gold’s underperformance relative to the USD Index – another bearish sign. If that wasn’t enough, we have just seen another significant move lower in the mining stocks. Is the precious metals sector about to plunge?

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Gold declined sharply yesterday, and so did silver and – especially – mining stocks. The gold stocks to gold ratio has broken below its previous 2014 lows. The above is particularly bearish as there was no huge rally in the USD Index yesterday. Yet, gold managed to rally in today’s pre-market trading despite the above-mentioned bearish combination. Is the decline over or about to really start?

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