The US Dollar and Gold disconnect
 
 Gold this week continued its run up higher which started around the $1,090 level and has run over $50 higher as of this week. This is in the face of the headwind of a rising US Dollar. Historically, there is an inverse relationship between the price of US$Gold and the US Dollar. With this latest rally in the US Dollar, continuing to hold over the 80.00 level on the DX index it would not be unusual to see US$Gold decline, and maybe test back down to the $1,000 – $1,050 level. This hasn't happened and instead US$Gold is moving higher indicating underlying strength.
 
 So looking forward a few months – the summer also tends to be a weak time seasonally for the Gold price – we could see Gold meander perhaps up to $1,150 – $1,200 area – ready for a new bull run into the end of the year breaking to new highs.
 
 The fact Gold is showing this strength indicates when the essentially medium term US Dollar rally (measured in months) – does run out of steam and breaks down into the 70.00s again, Gold will surely launch significantly higher from a firm base.
 
 The good news is that the longer the Gold price stays contained in the $1,100s the larger the ultimate move will be. Buying when price has broken and then returns to its 200 day moving average from the underside, and also when volatility and trading volume is low, has been and appears likely to continue to be a sure way to capture these large price moves
 

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