Source: Chart only from Barchart.com. Analysis of chart by the EdmundS.
In the US dollar index above, we have double tops in April, 2015 and December, 2016. Double tops could signify that the US dollar has peaked and a down trend may follow. However, one has to wait and see what price does before taking a position. Although the Commercials are net short from November, 2016 to January, 2017, the net short is not as large as in March/April, 2015. One therefore has to wait and see which direction trend developments.
Since gold is quoted in US dollars, the strength or weakness of the dollar will affect the gold price. The US dollar is not the only driver of the price of gold. According the the World Gold Council there are many inter-related factors the affect the price of gold. An analysis by the World Gold Council suggests that the relationship between the US dollar and the gold price is asymmetric i.e. gold prices rise more on a weak dollar than they fall on a strong dollar.
