Rising crude bullish for Gold

Rising Crude prices continue to weaken the Dollar.

Dollar Index

The Dollar Index is consolidating between 89 and 91. Bullish divergence on the Trend Index suggests solid support but continued rise in crude prices or threat of a trade war could undermine this.

Dollar Index

Gold has been testing resistance at $1350/$1360 per ounce over the last 3 months, catching bulls several times with a false break followed by a hasty retreat. But follow-through above $1360 would indicate commitment from buyers. And retracement that respects a new support level at $1350 would confirm the breakout, signaling another primary advance. A weaker Dollar would fuel demand for Gold.

Spot Gold

There are two wild cards that could cause an upward spike in gold: a trade war with China and rising geo-political tensions. The former would weaken the Dollar if Chinese purchases of foreign reserves are scaled back, while the latter would directly increase safe-haven demand for gold.

2 thoughts on “Rising crude bullish for Gold

  1. John Bannister says:

    Colin, I understand that China stopped purchasing crude in $US at the end of March. Apparently it is writing contracts in Yuan backed by gold. Will this impact on the markets in time?

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