Gold collapse and dollar surge due to impeachment proceedings

Usually gold moves opposite the dollar. Recently, however, both gold and the dollar index have been moving up. Gold has moved up largely because we got a rate cut and because there are war and recession fears. The dollar has moved up partly because of Chinese and European currency devaluation, and partly because no rate cut is expected later this year. There was bound to be a reckoning at some point as gold and the dollar sorted out which one would prevail. This morning, that reckoning came when the dollar index broke out upward and gold broke out downward.

What's driving this breakout? I've found surprisingly little analysis to explain it so far, but here's what I can figure out. First of all, today's breakout is genuinely driven by dollar strength, not by the weakness of other currencies. The dollar is up against a broad range of currencies, not just the Euro and Yuan. Secondly, markets are more forward looking than backward looking, so they're perhaps going to weigh future rate cuts more heavily than past ones. Thirdly, gold is up so far this year that perhaps the bulls got a little fatigued. We've been overbought on the weekly chart for a while now and forming a bearish divergence, so this could be partly a technical pullback in gold.

But I think what's really driving this morning's breakout is the Trump call transcript and the initiation of impeachment proceedings. Trump has broadly favored weakening the dollar, so it would be bullish for the dollar if he were removed from office.