I can’t imagine that the divergence between the dollar and commodities will continue for long. Essentially they are part and parcel of the same trade, so I’m note sure how long gold can hang around above $1400 while the greenback is trading at 77.35 versus the DXY.
Conventional wisdom would suggest that the dollar will succumb but conventional wisdom often turns out to be wrong, history shows. It was especially wrong in 2008 when commodity markets priced in hyper-inflation only to witness the biggest deflationary wave in post-war history as the global banking system nearly melted down.
My money’s on the buck short-term as overweight short-dollar positions are unwound.
