(Originally published on December 21, 2016 at goldtradingmastery.wordpress.com)
Well, the gold-price of the dollar went up last Wednesday after the Fed Meeting – just as I expected.
However, it moved a little slowly at first and failed to hit my trigger . So I decided to go ahead and buy dollars by market at 0.872mAU/$ ($1145.96/oz.) using 0.09 lots of gold. This is only a slighty lower price for the dollar than where I intended to buy in the first place.
Since then, the price of the dollar has climbed to 0.883mAU ($1131.91/oz.), netting me a gain of over 100mAU or 1/10 oz. Not bad for one week’s profit in my tiny two ounce account.
But I haven’t exited the trade yet, so I guess I shouldn’t count my chickens before they hatch either.
Here’s the latest chart for the dollar.
Just as I thought, the apparent moving average crossover on MACD turned out to be a head fake and the dollar gained momentum once again.
The 10-day EMA appears to be acting as dynamic support for the price. As long as this continues, long-dollar/short-gold trades will work out.
I now believe that the key to finding the bottom in the gold market is going to be determining when the stock market will fall in dollar terms.
The primary driver in the fall of gold is selling by gold-backed ETFs. And this is happening because the holders of these companies’ shares are liquidating their position in order to fund purchases of “normal” stocks like SPY, etc. So the USD price of gold will only reverse when the stock market itself falls – as this will drive cash out of the normal stock market and into gold-backed ETFs, which will force ETFs to start buying physical gold again.
Over the next few weeks, I’m going to start paying attention more to what’s happening in the stock market.
If you have any questions about the state of the current gold trading environment, leave a comment below.