Gold price didn’t exceed its previous high, but it also remains relatively close to the upside target of $2,730.
The USD Index continues to trade sideways, most likely forming a really broad bottom.
As another attempt to move below the late-2023 lows was invalidated, it’s clear that the USD Index is about to move higher.
There’s also the technique called “three-line break”. It simply means that a given market has to break above three subsequent resistance lines, and it is only the third breakout that really matters.
In the case of the USD Index, the next breakout will be the third one.
Meanwhile, the GDXJ reversed and closed yesterday’s session lower. It didn’t invalidate the move above the July high, but it did invalidate the tiny ($0.01) breakout above the 2022 high.
That’s an exceptionally powerful sell signal, especially since this year’s rally seems similar to the one that we saw in 2022 – before the huge slide.
All in all, gold and silver might move even higher here, but the rally in the GDXJ is likely to be limited as it already reached its very strong resistance.
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Przemyslaw K. Radomski, CFA
Founder, Editor-in-chief