Gold Signaling A Top In The US Dollar CPI, PPI volatility ahead

(September 12,2023- Jonathan Da Silva)

In the last commentary I wrote, I suggested exiting the precious metals. Indeed, both gold and silver are lower again this morning. The daily gold chart below shows momentum turned down, heading in the oversold direction.

In my opinion, the probability is that stochastics will fall all the way to the bottom. At the same time, prices also can move lower before they turn. I am waiting for said turn as an opportunity to get long, but for now, I am watching the August $1,885 low; will it hold? I expect there to be volatility, which means whipsaw price action, into the end of the week with CPI on deck tomorrow and PPI Thursday.

The dollar is in the process of recuperating the down day it had yesterday and is just about ready to tag the resistance level I’ve been pointing to.

The gold-to-silver ratio looks just like the U.S. dollar does on a chart, ready to tag overhead resistance of its own.

My base case is that metals get flushed down between now and the end of the week as the ratio and DXY hit their resistance and sputter out. If gold were to hold $1885 as the ratio and dollar top, I would consider that a signal for a long trade in metals, as well as an opportunity to add to a long-term stack.