Price action over the prior week.
Anecdotal and other sentiment indications.
Price pattern sentiment indications and upcoming expectations.
Price action over the prior week
The metals complex rallied in the past week, with the SPDR Gold Trust (NYSEARCA:GLD) leading the way, but with Market Vectors Gold Miners (NYSEARCA:GDX) and silver trailing, at least from an Elliott Wave and Fibonacci Pinball perspective.
Anecdotal and other sentiment indications
Week after week, I try to point out the inconsistencies in investors’ thinking when it comes to gold. I also attempt to shine a factual light upon the market fallacies adopted by the general investor community. In fact, I have heard just about every “reason” out there as to why gold will or will not move. But, I have to tell you, some of the arguments I have read this past week really took the cake.
“The U.S. dollar index dropped once news was reported by Congressional leaders that an immediate repeal and replacement legislation for America’s health care was not in order.”
First, this is a clear example of assuming correlation is equivalent to causation, which is a logical fallacy.
The dollar has been in a downtrend since it struck the long-term target we called for back in July of 2011. Yes, you heard me right. Back in July of 2011, I called for a multi-year rally in the DXY when everyone else was looking for a dollar crash at the time. At the time, the DXY was in the low 70’s and I was looking for a 3rd wave target in the 103.50 region.
Since we struck my target 103.50 region early this year (and did slightly exceed it by 32 cents), the DXY has been pulling back from that long-term target. And, yes, it has been in a multi-month downtrend since that time.
So, to claim that the healthcare news supposedly “caused” the dollar to drop while it has been in a multi-month decline is no different from claiming that Trump Jr.’s issues caused the dollar to drop. It is no different from claiming that Trump’s meeting with Putin caused the dollar to drop. It is no different from claiming that the drop in the price of oil caused the dollar to drop. It is no different from claiming that the GDXJ rebalancing caused the dollar to drop. It is no different from claiming that my son’s sore throat this past week caused the dollar to drop.