Gold already reversed – It’s miners’ turn

It seems that I could end today’s analysis after writing the title. That’s exactly what is happening.

Ok, USD’s comeback above the upper support line and the April low is one other notable thing, but other than that things are pretty much as they were yesterday.

Gold price reversed in a quite clear way after reaching its rising resistance line. Similar session ended the rally in early August, so the top might be in.

Miners echo Gold’s reversal

In response to that, miners declined yesterday, and today, they moved higher and reversed their course. It seems that they are forming a daily reversal one day after gold did the same thing.

Of course, this changes just a little from the long-term point of view.

The thing that it changes is that based on today’s early rally, GDXJ reached the rising, long-term resistance line. This could mark the end of the multi-month rally. Quoting my previous analysis:

(…) it seems that the GDXJ has reached its own ‘this is it’ moment as its rally matched the size of the previously huge upswings. At the same time, it approximately reached long-term resistance levels. Plus, it’s extremely overbought on a short-term basis and it’s still early after U.S. Labor Day – it’s time for a decline.

Seasonality favors a decline

After all, gold declined after 9 out of the past 10 Labor Days and paying attention to the most reliable seasonalities is one of the more important gold trading tips.

Finally, the USD Index moved back up yesterday.

It’s trading in the same tight trading range as before, but the move up is noteworthy, as it took the USDX back above the April low and the upper of the declining support lines. The lower line simply held, and the move below the upper one was just invalidated.

The USD Index is ready to rally. When will that rally finally launch? Nobody can tell with certainty. Perhaps it will be the interest rate decision that triggers the rally even if it’s a widely-expected cut. After all, markets tend to move on rumors (they already did) and then reverse based on the actual event. In the USD Index’s case, it could be the case that it simply refused to decline further based on the rate cut semi-announcement – thus showing strength.

However, given the current bullish setup, I wouldn’t be surprised to see a rally in the USD Index even before the rate cut. This, of course, would likely trigger declines in precious metals and mining stocks.

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