That is one ugly looking chart. Higher interest rates would mean a strong dollar, not the weak-looking one pictured in this chart. Not only is the dollar forming a huge top, its short-term moving average is rolling over, making it look like the dollar is going to fall off the edge of the table if support at current levels breaks. So maybe what this chart is telling us is that the Fed won’t be raising interest rates on Wednesday. Maybe the underlying buying pressure in the precious metals is also telling us the same thing. Regardless, any plan by the Fed to stop or even just delay any interest rate increases they have already telegraphed to the market will be very bullish for gold and silver.
Big News To Create Metals Spike?
So here are the big questions at the moment, Eric: Is this slow boil developing in the precious metals just a head-fake? Or are we at the beginning of a big upward jump in precious metal prices? Let’s see what happens on Wednesday, but this dollar chart and others are giving us the footprints of clairvoyant insiders. It looks like they have already been preparing for a few weeks that the Fed will not raise interest rates. That would be big news because it is contrary to what is expected, and big surprises like this cause volatility.
A Long Awaited Breakout
Here is what to watch: For several weeks now gold has been in a trading range of roughly $1,185 to $1,215. So gold needs to break out of that range. Let’s see if it prints $1,220, which could be the first step of a long awaited breakout.