Gold, DAX, TSX & USDZAR All in Play as Commodities Continue to Take Spotlight

This is what I am watching today, and it’s all related to the commodities markets.

Gold

The first chart in front of you is the gold market. You can see that we have broken above the $5,000 level and today I will be watching to see if we can stay above there at the daily close. That would bring a lot of symbology into the market for just how strong it could be and whether we make our way back towards the tops. I am talking about gold and not silver because gold has many more reasons to go higher than silver. There is central bank accumulation and, of course, plenty of geopolitical problems that could continue to give it a boost. So really I am watching to see if we close north of $5,000.

DAX 40 (Germany)

The German index, the DAX, looks pretty interesting because it fell early in the session but has turned around just above the 50‑day exponential moving average to show signs of life. The 24,500€ level is an area that offers support as it was previous resistance, and the 25,000€ level above is significant resistance that, if we can break above it, would send us to the highs again. Today I am looking for short‑term bounces that I want to take advantage of because of the longer‑term uptrend and the fact that the German government is throwing a ton of money into infrastructure plays that will obviously help many of the larger corporations in the DAX. Of course, if the euro can cool off a little bit, that will help as well since Germany is a major exporter. If you squint, you can see a bullish flag that would measure for a move to about 27,000€.

TSX 60 (Toronto)

The next chart is the TSX, that is Toronto. Why am I looking at the TSX? Well, the same reason everybody is looking at the commodities markets: because they are so strong. The TSX is highly inflated at times like this due to a heavy weighting of raw‑material corporations. Canada has a huge deposit of gold and other commodities such as oil. As a result, in times when commodity markets do well, the TSX does well also. What has caught my eye is that we are bouncing from the 50‑day EMA and the trendline that dates back at least to August. This is an area where you would expect buyers to come in and support the market. It looks rather healthy. It is a little choppy during the session, but I think buying pullbacks is how I am looking at this.

USD/ZAR

Finally, in the currency markets we have the US dollar trying to break higher against the South African rand but struggling at 16. This tells me that the downtrend is still very much intact and the carry trade is still a thing. I like most of these exotics that the US dollar is played up against—the South African rand being one of my favorites, along with the Mexican peso and Hungarian forint—that when they rally and show signs of exhaustion, I think it is time to start selling. I look to do that today.