See the chart of gold below. It recently broke out of a sideways consolidation pattern. This triangle chart pattern breakout will produce a volatile, directional move upward for gold in the near term. Click on the chart to enlarge it.
This breakout in gold may very well cause the Aussie dollar to rally in the short term. This is because Australia is the world's 2nd largest miner/exporter of gold. So they're pulling it out of the ground at their same (somewhat) fixed costs. Yet their profit margins rise as gold increases in value.
Employment is still tight in Australia and so is inflation. Couple this with the breakout of gold to the upside and you may have the makings for a AUD rally.
How will you know? If the pair (AUD/USD) can close inside the blue circled area, then it will likely trade much higher in the near term. Click on the chart to enlarge it.
Keep an eye on the Aussie to see if the "land down under" can pull it off.
Sean Hyman
Editor/Trader, www.money-trader.com
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