Zong Xiaoли: US Dollar Under Pressure, Gold Shows Internal Divergence, What's Next?

I believe everyone has seen that the US dollar index faced significant pressure yesterday, with the price dropping sharply and essentially wiping out last Friday’s gains. Honestly, I was a bit surprised because the move was quite large, but upon reflection, it makes sense. After all, the dollar has been under constant pressure, and when the protective buying energy pauses and a large amount of dollar liquidity leaks out, it naturally drives the dollar index down. This is a reasonable behavior, but this time the decline was really quite big—how much capital has leaked out? I guess even Trump’s nose might be turned up in anger…

So, how will the US dollar index move today? I believe the market’s escape behavior still persists, so the dollar index remains under considerable pressure. However, tonight there’s a possibility that the protective buying energy will continue to step in, so how much the dollar index can fall is uncertain. We need to stay alert for potential reversals in the market. As for trading strategy, I suggest looking for opportunities to buy the dollar index on dips today, since from today onward, the protective buying energy might step in again, which could halt the decline and gradually turn the trend upward.

Regarding gold’s movement, yesterday was mostly a sideways trend. Although there was some upward movement, it was very limited. Today, after a rare surge, the price was slapped back down, which frustrated the bulls and embarrassed the bullish camp. However, the market’s reality is like this: with severe dollar liquidity outflows and massive capital fleeing, gold cannot escape unscathed. Under this big background, gold’s pressure will only increase, and prices will gradually decline until the bulls regain strength, providing a chance to push gold prices higher again. Therefore, today’s overall strategy for gold is to look for opportunities to short on rallies, as resistance levels (especially around 5045 and 5055) are quite strong. If gold can rise a bit, the chances of successful shorting increase, along with the profit potential. That’s the current gold outlook for today, for your reference…