These Factors Move U.S. Dollar, Gold

2021-11-18

Simpler’s traders found an opportunity this week to buy a dip in gold — while the U.S. dollar maintains a bullish path in the thick of Federal Reserve activity. 

Federal Reserve representatives were scheduled to speak throughout this week as everyone awaits an announcement of who will be the Fed chairman going forward. This ongoing tension surrounding the markets serves as potential catalysts for movement in the value of the dollar.

With the potential to be overbought, according to signals from indicators, the dollar has made strong advances.

The U.S. Dollar (DXY) and Gold (GDX) don’t have to move opposite to one another. Seeing upward movement in both can be a welcome sight for opportunistic traders. Both appear to have reorganized, according to the exponential moving averages, into an uptrend.

It may seem as if the two are correlated when in reality the connective thread between them is revealed by bonds and inflation. Simpler’s traders are keeping an eye on this interconnectivity as the market continues to roll forward.

As inflation has helped drive real yields lower, both gold and the dollar have gained. Gold has moved into a bullish channel leaving Simpler’s traders in a position to watch for pullbacks or reversals.

Keep in mind, the dollar doesn’t have to move lower to see gold move bullish. Simpler’s traders are looking for moments to buy the dips in gold while continuing to consider buying dips in the dollar.

With all this domestic movement, Simpler’s traders also consider action overseas.

As a weak Euro makes an attempt to gain a foothold, this European currency could have an influence on the U.S. dollar.

Gold, U.S. dollar, Euro — a watchlist to consider.