Trading A Gold Triple Top?
July 31, 2017
Dennis Gartman is editor and publisher of The Gartman Letter, and strategic advisor of the AdvisorShares Gartman Currency Hedged Gold ETFs (GEUR & GYEN). He regularly contributes to AlphaBaskets and lends his institutional insight to educate advisors and investors about commodities and the forex markets, including about trading gold in different currency terms.
Looking at gold, the dollar’s impact is obvious: the dollar’s bullish move has precluded gold from rising in US dollar terms and gold has instead fallen quite sharply. Indeed gold was and is so weak that it has fallen in EUR and Yen denominated terms, albeit dramatically less than its weakness in dollar denominated gold.
The market has been pushed lower as investors are now convinced by the weakness in the bond market that although the Fed may only move to tighten monetary policy once more before the year’s end the back end of the curve shall see rates rise… shall see the yield curve steepen… and shall in the process give investors the distinct possibility of having higher rates afforded them that shall compete with gold for investment capital at the margin.
Further, we find it disturbing that dollar/gold does appear to be topping out in broader terms as it peaked three times over the course of the past several months at or just below $1300/oz.. Also, the very short term upward sloping trend in place since early July has been… or is being … broken in the process, which only adds to our disconcertion. Finally, the political situation around the world has eased, not worsened over the weekend with the report noted below in our discussion of the political situation that the Foreign Ministers of North and South Korea actually met and shook hands at a meeting of the ASEAN nations in Manila over the weekend.