Back in the day, when I was actively writing for the gold and silver community, I used to regularly include charts of EuroGold and YenGold to show the readers how investors in the metal outside of the US are faring.
As you know, the Asian and European markets are very, very active in gold, perhaps even more than US investors (although crypto has definitely made big inroads in all countries, especially Asia). It was useful to me to look at the charts of gold in these foreign currencies to get a sense of trend.
What has always been true is that gold is the “anti-Dollar”. It is either a vote of confidence in the US economy/government fiscal condition or a vote against it. When the Dollar is weak, Gold tends to be strong. The opposite is true – when the Dollar is strong, especially if interest rates in the US are rising, gold tends to be weaker.
What does happen however is when gold shrugs off this normal relationship, in other words, moving higher even when the US Dollar is stronger, the effect on the metal when viewed in terms of foreign currencies is even more pronounced. It actually outperforms the gold price that we see here in the US.
Take a look at the chart and you can see that gold priced in Euro terms has gained 34.6% as of today’s gold price while Dollar-priced gold has increased 31.7%. Both are year to date performances.
Also, notice how the two golds performed on their respective charts. Eurogold has not broken its uptrend drawn off the March 2020 low (Covid starts) and the low formed in August the following year (2021).
Dollar-priced gold did however break the uptrend and fell through horizontal chart support drawn off the 2021 lows whereas Eurogold never even came close to even testing that important chart support level.
After consolidating over a 3-month period from April this year to July, the metal has now entered what sure appears to be an acceleration phase as the slope of the ascent line has steepened dramatically. The top of the congestion phase ( consolidation) has now become the new downside support level. The price should not close through this level – particularly in EuroGold if the uptrend remains in force. Investors who hold a long-term view of the metal will probably be looking to add on if price does drop down closer to this support region.
It would be negative for prices however if price was to fall through the bottom of the congestion zone and be unable to quickly recover. That to me would signify a change in the trend.
If you think any of this is useful to your readers, please feel free to post my thoughts and the chart up at your site buddy.
Sincere best wishes old friend,
Dan
10/21/24
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