GLDM - Gold: The Next Major Long-Term Bull Market Is Upon Us

2023-07-31 07:53:21 ET

Summary

• The US dollar's decline has accelerated recently due to investors lowering their expectations for interest rate hikes.
• The US Dollar Index, which tracks the dollar against other major currencies, has dropped 3% year-to-date and 10% since September.
• In contrast, stocks have performed well, with the S&P 500 up 19% and the Nasdaq Composite up 35% this year.
• Gold prices may also benefit from the weakening dollar, as a lower dollar value makes it cheaper for foreign investors to purchase gold priced in dollars.

Why is the US dollar losing its shine?

The US dollar's decline has accelerated recently due to investors lowering their expectations for interest rate hikes. The dollar had reached a 20-year-high last September due to the Federal Reserve's aggressive rate hikes, but concerns about a recession, bank collapses, political infighting, and excessive spending weakened it. As inflation cools, the Fed is likely approaching the end of its rate-hiking cycle, which has contributed to the dollar's decline. This decline could benefit certain companies, particularly tech firms like Salesforce, Microsoft, and Apple, which generate significant revenue overseas. A weaker dollar could support their earnings and boost their stock prices. However, experts believe that the dollar's decline may be limited, and it might not have much further room to slide. Other central banks catching up to the Fed's tightening cycle could stabilize the greenback.

The Fed's newfound focus on data is bad news for the sliding dollar

The US dollar has declined this year, while most other assets have risen. Analysts are concerned that the dollar's prospects could worsen as the Federal Reserve is expected to end its interest-rate hikes. The US Dollar Index, which tracks the dollar against other major currencies, has dropped 3% year-to-date and 10% since September. In contrast, stocks have performed well, with the S&P 500 up 19% and the Nasdaq Composite up 35% this year. The Fed's shift in its tightening approach, with a focus on data dependence, has contributed to the dollar's decline. As interest rates stop rising, the dollar becomes less appealing to foreign investors seeking higher yields, leading to further weakening against other currencies. Going forward, currency traders will closely watch the monthly inflation data as a key indicator for the dollar's performance. Gold prices may also benefit from the weakening dollar, as a lower dollar value makes it cheaper for foreign investors to purchase gold priced in dollars.

Let's take a look at the weekly standard deviation report and see what short - term trading opportunities we can identify for next week.

Gold: Weekly Standard Deviation Report

Jul. 29, 2023 4:24 PM ET

Summary

• The weekly trend momentum of 1995 is bullish.
• The weekly VC PMI of 2001 is bearish price momentum.
• A close above 2001 stop, negates this bearishness neutral.
• If long, take profits 2022 - 2043, If short, take profits 1980 - 1959.
• Next cycle due date is 7.30.23.

Weekly Trend Momentum:

Hey, here's the weekly trend momentum report for the gold futures contract. Last week, it closed at 2000, which is above the 9-day Simple Moving Average ((SMA)) at 1995. This confirms that the weekly trend momentum is bullish. However, if it closes below the 9 SMA, it would turn the short-term trend to neutral.

Weekly Price Momentum:

As for the weekly price momentum, the market closed below the VC Weekly Price Momentum Indicator at 2001, indicating a bearish momentum. If it closes above the VC PMI, the bearish trend would shift to neutral.

Weekly Price Indicator:

Regarding the weekly price indicator, consider taking profits on shorts when the price reaches the Buy 1 and 2 levels of 1980 - 1959. On the other hand, you can go long on a weekly reversal stop. If you're already long, use the 1959 level as a Stop Close Only and Good Till Cancelled order. Look to take profits on longs as we reach the Sell 1 and 2 levels of 2022 - 2043 during the week.

Cycle:

The next cycle due date is 7.30.23.

Strategy:

In summary, if you're short, take profits between 1980 and 1959, and if you're long, take profits between 2022 and 2043.

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