The US dollar and gold have an inverse relationship. It is easy to see this year. Gold rallies out of the gate in 2025 into the April top. The dollar collapses at the start of the year to the April low. The dollar bounces, then drops again. Gold drops, and then bounces again. Textbook.
Keystone posted the gold chart in March pointing out the topping-behavior but the pullback lasted all of a couple days. News changed the gold and dollar story during that late March early April period for the markets. The stagflation talk went into high gear ant that created that long up candle in April for gold. The Fed meeting then fueled the stagflation talk creating ongoing buoyancy for gold also supported by King Donnie's Trade and Tariff War. Nikki Haley was correct when she said chaos follows him (Trump). It is funny.
So gold flattens out and ditto the dollar both looking at each other wondering what to do. Gold is in negative divergence so she will drop and the buck is in positive divergence so she will pop on the weekly basis.
On the dollar chart, the dark blue lines show the ongoing long-term channel for the buck. Buy it at 101 and sell it at 106.5 rinse and repeat, until April. The stagflation talk, Fed drama and daily Donnie reality television show conspire to smack the dollar lower and exalt gold. The dollar loses the lower channel rail at 101, and then comes up for the back kiss to decide if it really wanted to collapse and, yes, it did, then dropping down to the current 99-handle. Textbook back test.
With the backdrop above, everybody and his bro is shorting the dollar and longing gold. The doorman, shoeshine boy, Uber driver, and pastry chef formed an investment club and they are buying gold with both hands with their paychecks while shorting the US dollar with leveraged funds. How do you think that is going to end? The green lines show the positive divergence at play for the dollar. Note that the MACD line is still weak and bleak perhaps wanting another low in the dollar but overall, she is fueled-up on the launch pad ready to take-off higher.
The dollar will bounce as the purple line shows, or, if the MACD wants to play a little game before it goes possie d, the dollar will go up for a few days, then back down next week for a low, then it will be up and away as shown by the light blue line.
The pink box for the ADX for the dollar shows that the trend higher during late 2024 was a strong trend but that petered out in February/March as the dollar collapsed. Note that as the dollar has been sick all year long, the ADX is struggling to move higher and it is at the level, 28-ish, where the down move would be labeled a strong trend lower; it is not a strong trend lower.
The Aroon is comical and reflects the current market mood. Nearly all dollar bears believe the dollar will continue lower and nearly all the dollar bulls also believe the dollar will go lower forever. This behavior reflects the massive dollar shorts at play now.
If you are short the dollar, you are about to have a religious experience. When the dollar rocket begins launching on the weekly basis due to the possie d fuel the shorts are going to panic bigtime. The dollar will likely be a moon shot higher as gold drops. Remember, since the dollar and euro hold about two-thirds of each other's currencies in their baskets, the euro moves inverse to the dollar, and if you bring up the $EURUSD chart that is proven. The euro has the same hitch in the MACD like the dollar above so the end is now or over the next couple weeks. Plan accordingly going forward; dollar up, euro down, gold down.
On the gold chart, the exact opposite technical analysis is at play; remember the two move inverse to each other. Gold has made matching or higher price highs but all the chart indicators are negatively diverged. She is out of gas. There are not even any fumes remaining in the tank. The ADX shows that gold remains in a strong trend higher on the weekly basis but note how it is topping-out and likely to roll over. The ADX is a lagging indicator so the strong trend higher will be lost when it drops below 30.
The Aroon for gold is also comical like the dollar. Nearly all gold bulls believe that gold will continue higher while nearly all the gold bears (96% of them) believe that gold will go up forever. That is funny. The dollar boat is fully loaded to the short side while the gold boat is fully loaded to the bull side and both ships are headed towards one another with an iceberg in the middle. It is fun stuff.
If you are long gold, or short the dollar, you are going to lose your shirts. Keystone is not playing any currencies or gold long or short right now but obviously the play forward is shorting gold and going long the dollar. The only thing that can change the scenario forward is new comments from Fed Chair Powell or from King Donnie.
If you remain long gold and/or short the dollar, you will be standing Alone with your pants pulled down and shirtless going forward. A dirtbag stole a couple of Heart's musical instruments. If you see them, let Anny and Nancy know. Losing one of your beloved instruments you have played for 40 or 50 years is like losing your arm if you are a musician. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
Note Added Saturday, 6/14/25: The dollar sinks -1% this week closing at 98.18 with the positive divergence remaining in place on the daily and weekly charts sans the MACD on the weekly chart that still wants price to print matching lows in the week ahead to plant a firm bottom and begin a multi-week rally higher. That second scenario above is playing out for the dollar. The wrench (spanner) in the works is the Fed meeting on Tuesday and Wednesday that can send markets wildly in one direction or the other. The dollar daily chart did not yet show a lower low compared to April until Thursday and Friday. Bingo. Price makes a lower low and all the daily chart indicators are possie d so price needs to bounce and begin a multi-day rally. Boiiiinng. The dollar bounces on Friday. Barring the Fed drama and any noise from Trump's Trade and Tariff War, the dollar should place a firm bottom next week and begin a multi-week recovery. Gold continues higher during the past week as the dollar slumped on the daily basis. Traders and investors are perceiving gold as the only safe play going forward. You know what happens when everyone and his bro are betting on one direction. Interestingly, gold came up for a closing high at 3432 falling short of the record closing high in April at 3434. In addition, the April intraday high was 3500 but gold only got up to 3447 during the past week. With all the super gold hype, price should have at least printed a higher closing high. Be skeptical of gold especially as one analyst is calling for 5K in the short-term. All eyes will be on Powell on Wednesday. Gold has moved choppy flat through the 3200-3500 range since early April (for 2 months). The week ahead will reveal a break-out higher or failure lower. The forecasted bottoming and rise in the dollar says lower for gold but if the Middle East war gets out of hand and other trade and tariff problems surface, or if Powell shakes-up the markets on hump day, gold may prefer the flat profile going forward.
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