There is some activity in the precious metal and currency markets that we must report. Gold has been compressed at a weekly scale recently, as reported, meaning that a new price move lasting many weeks will soon begin. Those compressions were joined by daily-scale versions and both kinds now seem to be breaking upward.
We saw monthly-scale top extensions at the highs of gold a year ago so we remain pessimistic in the longer-term, but a substantial rally is still possible here – perhaps to challenge those highs?
Interestingly, this coincides with some bearish developments for the US$. The $ index has been making monthly-scale compressions for the last two months. Have a look at the old signals on this chart by the way – this index produces excellent results when examined through our spectacles.
These monthly compressions have yet to break but there are indications from the other time-frames that more $ weakness is coming, which may be enough to tip these monthlies over the edge into a substantial drop. These two weeklies below show that the $ index actually moved up from a weekly-scale compression that is now quite old (yet may provide some support later) but the $ is now breaking down from a newer compression in the £/$ rate.
In the even shorter-term, two daily-scale compressions have formed in $ cross-rates, both of which are breaking downward today. In each of these (and the £/$ weekly chart) we have inserted arrows to show 'which way is up and which way down' for the $, as conventions differ for each currency pair.
All this seems to indicate that new moves are starting here too - the $ is heading down and gold is heading up. This fits with some of the other moves that we anticipate of course, as mentioned in yesterday's grain report. We will advise further as these moves develop.