USD & Gold Trend 2

As we reported in our March 1 2010 Market View Analysis of the major trend that the USD has in relationship with Gold prices has not been fully taken advantage of by retail investors in the Forex market due to the contrary relationship of the two. However, institutional investors, hedge fund and portfolio managers managing a substantial amount of investment funds has taken this into account.

Medium to long term investments since August 18, 2009 was the pivotal point where it all started. The negative sentiments then during the financial crisis led almost every trader and analyst to focus on what was current and factual. There is nothing wrong with that! As it is equally important though quite difficult to find a turning point in these markets when the overwhelming sentiments are in one direction. With the USDX at the 74.20 extension levels never looked back from where it is now at the 82.73 high registered the week ending the 30th of April. As we also maintained that as long as the USDX does not fall below the 79.20 - 80.10 support levels the actual trend up is still intact and it goes the same way with gold at the $1000.00/oz support price.

The way the formation of the USDX today in a bigger perspective is quite bullish on a weekly and monthly basis. The daily chart may indicate a probable corrective mode may also be lurking above these levels; as resistances on prices parameters shows a corrective short-term divergence would occur in the near term outlook. Exactly when would depend on the price page indicator and momentum signals that would reflect a slow down.

In comparison while Gold prices registered its high at the $1226.38 the week of Dec. 04, 2009 and made a corrective move back to the $1043.80 the week of Feb 05, 2010 and is currently working at the $1180.00 way above mid-range levels of $1135.50. With this said, the potential of the Gold prices may well be more defined whenever the USDX would be correcting for the time being. Whenever this happens on a day to day basis, the next attempt for Gold to move higher would be back to the $1220.00's level which should not be discounted at this time. Although, the bullish speculative investors may not be as tolerable for any corrective moves when Gold prices may tend to go lower thereafter. But as a simple reminder that with an inflation adjusted gold prices and where the Dow Jones is at now , the Gold prices is still keeping at pace as to where it should be at as we have explained in in our hubpage.com blog and article on " inflation adjusted Gold prices and Gold as the currency of Last resort".

We'll keep you posted as to the significance of these two major instruments where the next potential may occur the least hopefully before they happen. but as of now it is what it is; both Gold and the USD is in tandem and moving in a line higher than most have anticipated. The irony of the matter is most analyst would say " yes, but until when? "

As we know our simplest approach to to speculate based on fundamentals and technical analysis with a combination of risk/reward factored in and not hindsight! As there will always be the inherent risk of loss when trading the Foreign Exchange Market.