gold sentiment and the dollar

I'll be the first to admit that gold sentiment is getting too bullish. At some point gold is most definitely going to have to correct and wipe out a big chunk of this bullishness.

However an interesting correlation has developed recently. Gold instead of trading inversely to the dollar has developed a tight positive correlation to the dollar. That has very bullish implications for gold.

The reason being that the dollar is now threatening to break out of the consolidation zone of the current T1 pattern. Once this happens we should see a second leg up in the dollar roughly equal to the first leg. That gives us a target of 93ish on the dollar chart.

As long as the positive correlation remains in play that would suggest a huge move higher for gold ... and don't even get me started on silver.

More in last nights update for subscribers.