On 17 October I posted this chart of the US Dollar Index stating that “Since the beginning of September world markets have been dancing to the tune of the US Dollar.”
Noting the direction of the stochastics and the gap beneath the current price and the lower support line I stated that “we can expect the dollar to continue lower in the short-term. Which is of course bullish for stocks, commodities and precious metals.”
US Dollar Index 17 October 2011
Today the Dollar Index looks to have bounced which is bearish for stocks and commodities. As the chart below shows, the index stopped short of the lower trend line and bounced. The stochastics (circled) are also beginning to turn up.
US Dollar Index 26 October 2011
Chart courtesy of StockCharts.com
It remains to be seen whether this latest dollar uptrend will be bearish for gold. As I have mentioned before, it is possible for gold & the US dollar to rally together and this may be one such occasion.