The dollar rallied for the second week in a row, and gold dropped along with it., but the trend is still dollar down/gold up in the medium term (chart below). If the dollar continues its recovery, then gold should continue its downward move.
The FED minutes made a pitch for a hike as early as June, and though we doubt that would happen, the fact that they are preparing the market once again means that gold could sustain a negative corelation with the dollar.
Gold verses the 30-year bond (chart below) continues its divergent trade which usually leads to a change in direction for gold. Since gold is presently trending down, a change to the up-side is possible according to this relationship. Since the bond has turned and started to drop, however, gold may continue to slide.
The futures traders reduced their extremely polarized positions slightly this week, although, not by much, and the over-all open interest actually increased. Both trading rooms continue to be VERY crowded. When this situation finally unwinds, it should be spectacular---in either direction. We are betting it will go down (spectacularly).
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