With France voting for Macron – and by default to remain in the EU – it is likely that fears of a European breakup have seen their worst over the intermediate timeframe. The dollar has received safe-haven status amidst euro fears over the past five years. Dollar strength has put downward pressure on precious metals.

A reversal higher in EUR/USD has begun. The last low in the euro (high in the dollar) of this magnitude marked the relative low in gold at $255 in 2001. Although diverse geopolitical and economic cross-currents will be impacting the gold market over the years to come, the importance of a 16-year cyclical high in the dollar (low in euro) as a backdrop should be at the forefront of long-term precious metals and commodity investors’ minds.

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