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Happy New Year 2023: Is This a Gold or USDX Rally?


January 3, 2023 ( Newswire) Gold welcomed the first day of 2023 with a rally, but is it just a side show, with the USDX being the one to watch for strength?

This gold rally is not that odd given that gold was declining most of the year, and some buyers probably wanted to harvest the tax savings by cashing in losses and they are buying back today (chart courtesy of

It doesn’t mean that the rally is here to stay. No, quite the opposite is likely.

Do you remember the “January rally” that we saw in early 2022? It lasted less than two days. Stocks moved higher on the first session of the year, and they formed an intraday top during the second session of the year.

And then, the S&P 500 moved from about 4,800 to levels below 3,600.

So, looking at the early-January performance might be misleading.

The lower part of the above chart features gold, silver, and the HUI Index (proxy for gold stocks). As you can see, silver outperformed gold strongly in December, while gold stocks did almost nothing, greatly underperforming gold. That’s a very powerful bearish indication for the following weeks. After all, that’s exactly what tends to happen close to market tops – silver outperforms, while gold stocks lag.

Speaking of mining stocks, did anything change in the case of junior mining stocks so far today?


In today’s London trading (the U.S. markets are still closed while I’m writing this), the GDXJ opened relatively high, but it quickly erased about half of the upswing.

Is the 2023 top in junior mining stocks already in? It could be the case, especially if we focus on the first half of 2023. We might see a powerful rally in juniors in the second half of the year, but seeing a huge decline in the first half of the year is even more likely.

Of course, these are not the reasons for the decline per se – I listed multiple thereof (e.g., rising real interest rates) in my previous analyses.

The other key driver of gold prices (besides real interest rates) is the USD Index, and it just showed substantial strength today.

This comes after a breakout and a rather lengthy confirmation thereof. Therefore, this could be the start of another powerful rally.

Why doesn’t the “tax loss buyback” mechanism apply to the USD Index (as it does to gold or stocks)?

Because the USD Index is ultimately an index not an asset per se, and the index consists of individual currency exchange rates, most important of them being EUR/USD and JPY/USD. So, it’s the relative valuation of two currencies, not a single asset. If the above-mentioned mechanism applied to the U.S. dollar, it might as well apply to the euro, and to the Japanese yen. And in this case, the effects would cancel each other out in the case of the exchange rates.

Consequently, the rally in the USD Index might be the thing that is really happening today, while action in gold and the stock market might be just something temporary and of little meaning.

Naturally, the above is up-to-date at the moment when it was written. When the outlook changes, I’ll provide an update. If you’d like to read it as well as other exclusive gold and silver price analyses, I encourage you to sign up for our free gold newsletter.

Thank you.

Przemyslaw Radomski, CFA
Founder, Editor-in-chief
Sunshine Profits: Effective Investment through Diligence & Care

All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski’s, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

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