FALLING DOLLAR BOOSTS METAL PRICES -- GOLD AND SILVER PRICES RISE -- COPPER PRICES NEAR TWO-YEAR HIGH ALONG WITH ITS MINERS -- RISING STOCKS WEAKEN THE DOLLAR
DOLLAR INDEX FALLS BELOW 50-DAY LINE...The dollar is under selling pressure. Part of the reason why may be rising stock prices. The dollar has been moving inversely to stocks over past few months (more on that shortly). It rallied during September when stocks were selling off. And has weakened over the past couple of weeks as stocks have been rallying. Chart 1 shows the Invesco US Dollar Index (UUP) falling below its 50-day moving average today. That's giving a boost to precious and industrial metals. And stocks tied to those metals.
GOLD AND ITS MINERS TURN UP... The daily bars in Chart 2 show the Gold SPDR (GLD) gapping higher today and rising above a falling trendline. Chart 3 shows the Market Vectors Gold Miners ETF (GDX) doing even better in percentage terms. It's also trading at the highest level in two weeks. Silver prices are rising as well.
SILVER AND ITS MINERS ARE ALSO RISING... Chart 4 shows the Silver iShares (SLV) rising to the highest level in two weeks. As normally happens on up days, silver is gaining more in percentage terms than the yellow metal. Chart 5 shows the Global X Silver Miners ETF (SIL) trading at a two week high as well. Precious metals have been in a correction within long-term uptrends. All four charts also show their 14-day RSI and daily MACD lines in the upper boxes starting to firm as well. Copper prices are also getting a boost from the weaker dollar.
COPPER NEARS TWO-YEAR HIGH... Copper prices are also rising today. The weekly bars in Chart 6 show the United States Copper Fund (CPER) nearing another two-year high. Copper prices have been consolidating within a rising trend; and appear ready to resume that trend. A weaker dollar is helping. And stronger economic numbers coming out of China which is the biggest importer of the industrial metal. Copper miners are also rising.
COPPER MINERS REMAIN IN STRONG UPTRENDS...The weekly bars in Chart 7 show Freeport McMoran (FCX) nearing another two year high with the industrial metal. While Chart 8 shows Southern Copper (SCCO) in a strong uptrend as well. Copper miners are leading the Material SPDR (XLB) higher today which is itself nearing a new record high. Stocks tied to aluminum and steel have also risen this week in the material space. Rising copper prices also suggest that traders are taking a more optimistic view on the global economy.
DOLLAR AND STOCKS HAVE BEEN TRENDING INVERSELY... The dollar and stocks have been trending in opposite directions since the spring. Chart 9 shows their inverse relationship over the most recent five months. The red boxed area shows the dollar rebounding during June as stocks sold off. The dollar turned down during July as stocks resumed their uptrend. The dollar rebounded again at the start of September as stocks weakened. The stock market upturn a couple of weeks ago pushed the dollar lower (see arrows). Their recent inverse correlation is due mainly to the dollar's status as a relative safe haven when global stocks sell off. This week's stock rally has pushed the dollar lower again. Which is one of the factors boosting commodity prices, and metals in particular.
