Metals, Miners Reverse as the USDX Approaches 100

How about bitcoin’s move below $90k?

All are related and point to the same thing – the picture that was outlined yesterday remains very much up-to-date.

USD Index Prepares for Major Breakout

After consolidating for a while, the USD Index is finally ready to break above 100.

And while the USD Index futures are slightly below 100, the cash index is already above this key mark.

After yet another – verified – breakout, the USD Index is moving higher once again. This time, it could be the move that takes the USD above 100 and it then stays there.

This – when it happens – will be a clear confirmation for the entire world that the trend in the USD has shifted.

You might be wondering whether the U.S. Supreme Court decision could change the trend – by invalidating and reversing the tariffs. In theory, that’s possible but, it seems very unlikely because:

1. The market reacted to the tariff announcements as if that was a bearish thing for the USD (incorrectly so). Consequently, whatever bad could have happened here, has already taken place.
2. Despite this possibility, the market is showing obvious technical strength – it’s been rallying since the first interest rate cut and given how extremely bearish everyone still is on the USD, it’s gaining ground. As technicals often lead fundamentals, it doesn’t look like anything bad for the USD is on the horizon (or at least not in the immediate future).

Precious Metals Rally Fades

The precious metals market was ignoring the first part of today’s move higher in the USD (PMs and miners rallied), but when the rally continued, the latter reversed course.

At the moment of writing these words, all: gold, silver, and GDXJ are down today, while the UUP ETF (proxy for the USD Index) is clearly up.

The intraday reversal in the PMs is bearish on its own in technical terms, either way.

Meanwhile, bitcoin’s decline continues – bitcoin – the anti-dollar asset – is perfectly reacting to dollar’s strength. And as the USD’s strength continues, bitcoin is likely to fall profoundly.

Silver had its moment earlier today, but the intraday reversal makes the ‘silver has already topped’ scenario very likely. And now, despite the 100 reasons to be rallying in the long run – silver is likely to decline (in the following weeks and months)

On a side note, it’s International Men’s Day today, and I would like to wish all the men reading this all the best – profitable investments, healthy bodies, calm minds, and happy homes.

Thank you.

Przemyslaw K. Radomski, CFA
Founder
Golden Meadow®