Proving the old technical analysis adage true that the more a level is attacked, the higher the probability that it will break, gold recently broke through the $1000 ceiling and closed at a new, all time historically high price.
While this got a lot of attention in the media, gold sentiment remains relatively subdued in response. Since gold is the haven sought by dollar bears, the big question is whether this important technical move is a result of weakness on the part of the US dollar or whether it is secular strength from the gold market pure and simple.
The simple way we can look at this question is to strip away the effect of the US dollar by dividing the price of gold by the US Dollar Index, as the chart below shows:
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