At the turn of the month is when the dollar index tends to reverse. Does it mean something opposite for the precious metals market?All eyes on the USD Index! At least that’s where they should be if one wants to make sense of the recent price moves.For example, the USD Index could decline to its strong support level at the 38.2% Fibonacci retracement and the August 2022 low as well as the May 2022 high.
The USD Index appears to be extremely oversold on irrational behavior, and neither is likely to last. Especially now that it's the turn of the month, when the USD Index tends to reverse. This means that the top in the precious metals market is also likely in or at hand.Moreover, please note that there is a yet another, even stronger, support on the above long-term chart.At the moment of writing these words, the USD Index futures’ pre-market low was 104.
The USDX futures are slightly down in today’s pre-market trading, but it could be the case that the rest of the world is reacting to the recent events. Let’s not forget about the USD Index’s tendency to reverse at the turn of the month. We’re still very close to it, which means that this effect’s bullish implications remain intact.As you can see on the above chart , the decline in the USD Index corresponded to the rallies in gold and in the stock market.
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