Gold and Gold ETF May Be Due For A Correction
With the odds of a countertrend rally in the U.S. dollar increasing, “weak dollar” assets such as gold may be setting themselves up for a correction. The four technical indicators shown below are fairly reliable in terms of identifying a weakening trend. With the Fed due to announce the second round of quantitative easing on November 3rd, gold may be able to push to new highs, especially if the gold ETF can hold above $130, but the risk-reward ratio is questionable in the short-term.
Since most risk assets, including gold, have been rallying primary based on the expectation the Fed will print more money, a correction in gold could be accompanied by a correction in stocks.
