Tuesday's premarket trading is interesting for precious metals investors. The U.S. Dollar Index is basically flat, but silver jumped up almost 30 cents, showing strength. Gold is up as well.
The above relative price moves confirm that the precious metals sector really wants to move higher in the short term, and that until it does, daily declines will be limited.
Let's take a look at the chart of the U.S. Dollar Index.
Courtesy of StockCharts.com
What's likely to happen next? The U.S. Dollar Index is likely to verify the breakout above the previous highs. The support levels are between 100 (a round number) and 100.60 (the intraday high from December 2015 high), which is a quite wide area, so the specific target is unclear. Thus, it doesn't seem that we can base our entry point in metals and miners on the U.S. Dollar Index alone. We can, however, look for confirmations from the precious metals themselves once the dollar is within the target area.