Wednesday, October 30, 2013

Gold Price Rallies, Dollar Fades

Let's check in on my favorite chart comparing the US dollar (as tracked by the UUP) and gold (as tracked by the GLD) ...
(Updated chart)

We can see that gold continues to march higher. And it is marching higher on what should be good news for gold. That's very important.  For a while, gold was going down on good news, which is quite bearish.

But now is when I disappoint my gold bug friends by saying that the tests for gold aren't over this week.

There are two real tests left. The first will be the reaction to the Fed statement later today. And the second will be how gold ends the week.

More conservative investors may want to refrain from adding positions until after we see positive results from those tests.

Meanwhile, the US dollar remains near a two-year low against the Euro, and the US dollar index does not seem to be able to manage a significant bounce from the low it tested on the 24th and 25th.  However, it could just be faking us all out, so be prepared. 

One final note -- Miners working in Mexico including Primero Mining and Silvercrest Mines are rallying this morning despite the fact that Mexican lawmakers remain "firm" on a new 7.5% to 8% mining tax. Sure, it's easy for miners to rally on a day that gold goes higher, and we'll have to see how these miners (and any miners) end the day. Still, it's almost as if the bad news was priced in. And a rally on what should be bearish news is ... you guessed it ... bullish.

But we'll see. Good luck out there.

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