As the global equity markets begin their correction down to the early July low, increased risk has returned. This short-term action should be positive for the U.S. Dollar Index. Gold, the most sensitive commodity to the USD, is expected to pull back over the next few weeks with a low developing in mid-June.
Investment approach: Models indicate that gold will retrace part of its recent advance. Investors may wish to wait until the expected trough in mid-June before entering new long positions in gold or gold stocks. Longer term models point to increased upward pressure after the low in June and July. The July target is $1000.
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