In this edition of the MTA Chart of the Week, Jeffery E. Lay, CMT looks at the inverse relationship between the US Dollar Index and Gold.
The daily bar chart above demonstrates the inverse relationship between the US Dollar Index and Gold. Plotted on top in black bars are US Dollar Index futures; Gold futures are plotted on bottom in orange bars. Blue vertical lines mark specific points of interest.
It’s said that when the Dollar goes up, Gold goes down – and vice versa. But this relationship can, in the short term, decouple. Note that in the last two episodes when Gold compressed in a triangle like fashion (first on this chart in 2003, and again in 2006) that the Dollar biased downward during Gold’s consolidation.
