WATCHING THE DOLLARThursday, October 4th, 2012
After two weeks of frustrating back-and-forth action it looks like the bear flag in the dollar is finally ready to break to the downside. This should deliver one more leg down to possibly test or marginally break below the February low before forming an intermediate bottom.
The next 2-3 weeks should be the best opportunity for gold to test $1900.
Again I don’t expect a breakout to new highs this year and once the test occurs it should fail and be followed by another intermediate degree decline as the dollar rallies out of its intermediate cycle bottom. The breakout to new highs should occur during the next intermediate cycle sometime in the spring.