Gold Never did 8

This chart of the USDX index shows an important breakout is afoot. If this breakout proves valid and continues ahead, it may present some challenges for XAUUSD by means of key resistance near 4240/45. Any decline below 4165/70 is likely to find subsequent support around 4115/20. Nonetheless, the DXY chart below may not only suggest selling pressure will re-emerge --likely near 4240, but could re-intensify selling towards a break of 4100. Im such intermarket tehnical dynamics, such bullishness in DXY could mean repeated failed buying for XAUUSD, rather than outright violent sell-offs in the yellow metal.

Wednesday's FOMC release of the dot plot and Warsh press conference pushed bond market to price rate higher probabilities for a 25-bp rate hike in September and a full chance of a similar rate hike in October. Note how the white and green graphs have moved from below zero (yellow circle) to above above zero, shifting from rate cut to rate hike expectations. The green graphs shows 0.86%, implying an 86% probability of a quarter point hike in September, accompanied by a rise in DXY and decline in gold. The 2nd chart highlights the importance of the June 15th gap, whose floor stands at 4245/6, presenting a solid short-term support, which held successfully yesterday.