This is just a quick note to let you know what we think about today’s move to the 100 level in the USD Index and gold’s relatively small reaction to it.

It might seem bullish at the first sight, because the USD Index moved about 0.40 higher today and gold is only $3 lower (at the moment of writing these words) - this might seem to signal strength of the precious metals sector.

However, let’s keep in mind that the 100 barrier is a very important level from a psychological point of view (just like the $1,000 level for gold or $10 level for silver). Just because these are very round numbers, breaking them catches people’s attention. This means that a lot of people can and are likely to react to such levels by either selling or buying at them. Consequently, such round numbers are natural support and resistance levels.

At the same time, let’s keep in mind that gold and the rest of the precious metals sector reacts strongly to breakouts and breakdowns in the USD Index - more than to the moves in the latter per se. Consequently, with USD Index AT the 100 level, but before a confirmed breakout above it, it’s no wonder that investors are waiting for decisive action before selling their gold, silver and mining stocks.

Therefore, just because we saw a big plunge in the precious metals market today, doesn’t make the situation bullish - we saw a move to a major resistance level in the USD Index, but there was no breakout.

On an administrative note, the markets in the U.S. will be closed on Thursday and we expect the trading activities to be limited on Friday as well. Consequently, there will be no regular Gold & Silver Trading Alerts on Thursday and Friday. However, if something urgent happens, we will provide you with a quick alert anyway (similar to this one). The alerts will be posted normally beginning on Monday, Nov. 30.

Thank you.

Sincerely,
Przemyslaw Radomski, CFA
Founder, Editor-in-chief

Gold & Silver Trading Alerts
Forex Trading Alerts
Oil Investment Updates
Oil Trading Alerts