Current situation in U.S. dollar and non-USD gold price

Generally, the situation in the USD Index evolved in line with the True Seasonal tendencies.

We saw a small correction, as seen on the short-term chart. The above patterns are suggesting another move lower in the final part of this month, which could mean a breakdown below the June low and a more decisive move to the downside.

Please note that the quality of the prediction (green line in the lower part of the above chart) declines in the final part of the month, which means that a deviation (in the form of a bigger decline) is not unlikely.

The bearish implications are for the first days of October, so the move lower could be seen quite soon. That’s one of the factors that make the short-term outlook for precious metals not as bearish as one might view it based on the medium-term trend.

Now, let’s examine the weekly chart.

On the above chart, we see that the breakdown below the rising, medium-term support line is still not confirmed (weekly closing prices this week and next will confirm the breakdown if they are seen below the rising support line). Taking into account what happens on the short-term USD Index chart, the dollar could move lower – to the area marked with the black ellipse on the above chart - but it doesn’t have to.

As we wrote in our previous essay on the dollar and gold:

(…) the target area is quite unclear because of the multiple support lines, including the long-term support line seen on the previous chart. It seems that we could see the US Dollar Index in the 78-79 range before the bottom is in. Again the exact price target is unclear.

Therefore, the area marked with the black ellipse is the lowest downside target level.

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