Just like for silver, every major gold rally since 1971 has been during a time of US dollar decline (i.e., U.S. Dollar Index decline—that is, the US dollar as measured against a basket of major currencies.)
From 1971, the DXY declined from about 120 to around 86 at the gold peak in 1980. From 2001 the DXY declined from about 117 to around 74 at the 2012 gold peak.
During the current gold rally of the 2020s, it will likely be no different. It will likely go from the 2022 high of about 114 to a new all-time low, as it has in both of the previously mentioned rallies.
The current gold rally is situated in a similar context relative to the DXY and other related technical chart indicators, as shown below:
The gold bull market of the 70s started after the 1966 Dow/Gold top, whereas the current bull market started just after the 1999 Dow/Gold top.
For both bull markets, gold peaks and bottoms occurred in the same context relative to Dow peaks during the time.
From the start of the 70s gold bull market to the top in 1980, the DXY formed an ABC-type pattern ending with a new all-time low. The current bull market has been forming a similar pattern since 2001, and appears to be close to the last part of its move to C (or 5) to a new all-time low.
The big question is whether the December 2024 Dow peak, is actually the peak that will hold? If it is indeed the peak, then we can see the DXY decline even more over the coming years. (Like it did from 1977 to 1980).
In the 1970s, gold went from about $100 at point 4 to about $850 at point 5 (the January 1980 peak). What price can gold reach at the top of this bull market (point 5), considering that the current point 4 is likely at $2,500?
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About The Author: Hubert Moolman is a well-known precious metals market analyst based in South Africa. In addition to free blog posts, he publishes a premium gold and silver blog and a Silver Long-term Fractal Analysis Report.
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