Gold Technical Analysis – Potential Record Breakout

Gold has formed a bullish pattern and is flirting with a potential breakout to another all-time high. The U.S. Dollar had a “gap” downward, which is rare to see. The latest CPI data has also rug-pulled the Fed’s plan of holding interest rates high.

See the gold chart below showing gold’s rapid recovery from its dip. The resistance line (in yellow) is the barrier holding gold from closing at a new all-time high. If the gold price breaks this barrier, that leaves open air for it to rise.

Gold/USD – daily chart

DXY gapped down - broke a huge support level

The U.S. Dollar Index has just gapped down - a move so aggressive that there is space between the candlesticks/price history. This shows that investors are pre-empting another large bout of money supply increase and are abandoning ship. Notice the gap down, pictured below, also fell through a major price floor. Those hoping for USD strength wanted to see the price make a strong bounce off this floor, but instead saw it leap downward:

DXY – hourly chart

Copper skyrockets – all-time high

Copper has just broken out to a new record high as well. We covered its aggressive rise last month, which could have been seen as a tell-tale sign that industry is preparing for another wave of money supply increase.

Much of these recent movements have been invigorated by the latest CPI reading out of the U.S. The reading showed inflation looking under control. Although this is not necessarily true, this eliminates the Feds excuse to hold interest rates high. If their stated goal is simply fighting inflation, and the reading they have convinced people to trust shows that inflation is no longer an issue, then they are out of ammo. They either have to “turn the printer back on” or face the question of why they are needlessly punishing markets.