Gold futures are up ~$15 as I write this and the proximate cause can be explained as US dollar weakness as yields reach fresh multi-week lows. Gold in US dollar terms faces a key test of resistance defined by the confluence of the February high, the 200-day moving average, and upper 2-standard deviation Bollinger Band:
Gold (Daily)
It's not a secret that gold in US dollar terms and the USD/JPY currency cross have had a roughly 80% negative correlation for the last several months and this morning the USD/JPY is down more than 1% and on the verge of testing the 110 round number level:
USD/JPY (Daily)
The USD/JPY broke important support near 111.70 last week and there is no significant support/resistance until all the way down near 108.
The month of March also draws to a close this week and April happens to be one of the strongest months of the year for the junior gold mining sector (GDX also averages a 1.3% gain during April since its inception):
GDXJ Seasonality
The recent pullback/consolidation and transitioning correlations in gold mining shares may have been the perfect recipe to add enough skepticism in order for the next leg higher to be especially powerful (I have a feeling that there are plenty of market participants who are underweight the sector after the last couple of weeks).
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