Last Thursday I wrote about the U.S. Dollar Index and precious metals:
"...it (the dollar) is now encountering a strong resistance line around 98.20. If this resistance holds and turns the dollar back down, it could kick start a rally in the precious metals."
This is happening. The U.S. Dollar Index plunged on Friday and again today as both gold and silver prices soared upwards. Gold's rally was especially strong as the spot price got to $1327 and directional momentum turned 100% bullish. It is now most likely that gold started a new medium-term cycle with the double bottom lows of April 23 ($1266) and May 2 ($1267), and this market is bullish. Silver too may have started a new medium-term cycle with last Tuesday's low at $14.30 (although it could make a lower low this week). We will now wait for a sub-cycle corrective dip to buy in both metals. We should see this in gold within the next two or three weeks. If silver prices make a new low this week, it may be an opportunity to buy. Gold could really take off now, but the rally is well underway so it's a bit late to chase it, and a sub-cycle correction should be just around the corner. On the sidelines of both metals for now.
Crude oil prices plunged on Friday and pushed even lower today today to $52.11 (July contract chart). That is near the bottom of our original price target range for a final cycle low; however, we are not in a reversal zone for crude, and directional momentum in this market has turned 100% bearish. This means prices could go lower. We would like to see the final cycle bottom within the next reversal zone for crude (June 7 - 24). Let's wait a little longer and see if prices can push lower into that time frame. On the sidelines of crude oil.