Gold rallies but so does the Dollar

A long-term (monthly) chart shows Crude Oil (WTI Light Crude) has broken below its trend channel and is testing support at $45/barrel.

Crude Oil

Weak crude tends to coincide with a strong Dollar. Breakout of the Dollar index above 97 is likely. Rising Trend index troughs indicate buying pressure.

Dollar Index

Gold is headed for another test of resistance at $1350/ounce but a strong Dollar is likely to undermine a primary advance.

Spot Gold in USD

The All Ordinaries Gold Index broke resistance at 5400/5500, signaling a primary advance with a target of 7000. That will depend on further weakness in the Aussie Dollar and/or a stronger gold price.

All Ordinaries Gold Index

Conclusion: We are witnessing a rally in Gold due to global uncertainty but the LT outlook, with declining crude and a stronger Dollar, is still bearish.

Gold and the Dollar direction

Crude Oil (WTI Light Crude) respected support at $45/barrel, with turmoil in Venezuela raising concerns over supply. Breakout above $55 would signal another rally but declining peaks on the Trend Index warn of selling pressure. Expect another test of $45. Breach of support would signal a decline to test the 2016 low at $26/barrel.

Crude Oil

The Dollar index is weakening. If China continues to support the Yuan, we may see a correction to test support at 92. A lot will depend on trade talks in the next two weeks but I expect continued Dollar strength and Yuan weakness.

Dollar Index

The PBOC increased support for the Yuan over the last month, leading up to the US-China trade talks, causing the Dollar to weaken.

Chinese Yuan/USD

Gold has ranged below resistance at $1350/ounce for the past five years. Expect another test of $1350 if the Dollar weakens. Breakout would signal a primary up-trend but LT Dollar strength is likely ….and a correction to test support at $1200.

Spot Gold in USD

A weakening Australian Dollar has helped Aussie gold stocks. The All Ordinaries Gold Index broke resistance at 5400, signaling a primary advance with a target of 7000. But that depends on further weakness in the Aussie Dollar (< 70 US cents?) and/or a stronger gold price (> $1350?)

All Ordinaries Gold Index

Conclusion: We are witnessing a rally in Gold due to global uncertainty but the LT outlook, with declining crude and a stronger Dollar, is bearish.

Gold: Bull or bear?

Gold is testing resistance at $1300/ounce and is likely to follow-through to the long-term (LT) ceiling at $1350. Trend Index  on the LT  monthly chart displays a large triangular consolidation, indicating uncertainty. Upward breakout would signal a primary up-trend but this is unlikely, for three reasons. First, this is a bear market. A decline is more likely for that reason alone. Target for a decline is the 2015 low at $1050/ounce.

Spot Gold in USD

Second, a strengthening Dollar is likely to weaken Gold. I have inverted the LT chart of the Dollar Index (and Trend Index) below so that it is easier to relate to gold. As the Dollar strengthened, denoted by a LT fall on the inverted chart, Gold has weakened. The Dollar index shows a broadening consolidation since 2015, with bull and bear traps, again indicating uncertainty. At present, the Dollar is testing resistance at 97 but is likely to follow through to test LT resistance at 100. Rising Trend Index troughs above zero (remember the scale is inverted) signal buying pressure.

Dollar Index inverted

Third, falling Crude Oil prices are bearish for Gold. The LT chart below compares spot crude  to  spot gold, both adjusted for inflation to bring earlier peaks into proper perspective. The LT relationship is clear: gold and crude tend to rise and fall together. Crude prices have recently tumbled, exerting downward pressure on Gold.

Gold and Crude Oil, adjusted by CPI

Conclusion: We are witnessing a rally in Gold because of global uncertainty but the LT outlook is bearish.

Gold rallies despite strong Dollar

Falling crude prices show a dead cat bounce at $50/barrel, warning of further selling pressure. OPEC production cuts have not helped much as the market anticipates slowing demand from China.

Nymex WTI Light Crude

The Dollar Index is strengthening, with Trend Index troughs above zero signaling buying pressure. Follow-through above 97.50 would signal an advance to 100 in the medium-term (next quarter).

Dollar Index

Gold rallied to test resistance at $1250/ounce but this is still a bear rally and another test of support at $1180 is likely. Breach would warn of a decline to the 2015 low at $1050/ounce.

Spot Gold in USD

The All Ordinaries Gold Index ran into strong resistance at 5100. Declining Trend Index peaks warn of selling pressure. Breach of 4900 would warn of another test of 4550.

Gold in Australian Dollars

Strong Dollar warns of Gold weakness

Falling crude prices have helped to strengthen the Dollar. Nymex Light Crude found support at $50/barrel, helped by an OPEC production cut, but the organization does not have the sway it once had. A test of $45/barrel is likely.

Nymex WTI Light Crude

The Dollar Index closed above 97, signaling an advance to 100 in the medium-term (next quarter). Penetration of the descending trendline on the Trend Index would strengthen the signal.

Dollar Index

Gold is likely to test support at $1180/ounce. Breach would warn of a decline to $1050/ounce (the 2015 low).

Spot Gold in USD

Silver is testing long-term support at $14/ounce. Breach would offer a target of $10 but would also warn of similar weakness for Gold.

Spot Silver in USD

The All Ordinaries Gold Index is consolidating between 4500 and 5500, buoyed by a weaker Australian Dollar. But Gold is more volatile than the Aussie Dollar and further weakness is expected. Bearish divergence on the Trend Index warns of selling pressure. Breach of 4500 would signal a primary decline.

Gold in Australian Dollars

Falling Crude, stronger Dollar warn of Gold weakness

Nymex Light Crude is falling steeply. Breakout below the trend channel warns of reversal to a primary down-trend. Breach of support at $55/barrel would indicate a test of $45/barrel.

Nymex WTI Light Crude

Falling crude prices are likely to strengthen the Dollar. Dollar Index breakout above 100 would signal another primary advance. Penetration of the descending trendline on the Trend Index would also suggest another long-term advance.

Dollar Index

Falling crude prices and a strengthening Dollar are likely to weaken demand for Gold. Reversal below $1150 would signal a decline to $1050/ounce (the 2015 low).

Spot Gold in USD

Silver is testing primary support at $14/ounce. Breach would offer a target of $10 but would also warn of a primary down-trend for Gold.

Spot Silver in USD

A weakening Australian Dollar has so far offset the decline in the Dollar price of Gold. The chart below, however, shows strong resistance at $A 1750 to $A 1800. Declining peaks on the Trend Index warn of selling pressure and penetration of the rising trendline on the price chart would threaten another test of LT support at $A 1350. Local gold miners would be likely to follow.

Gold in Australian Dollars

Gold & Crude weaken as the Dollar lifts

Nymex Light Crude is testing support at $60/barrel on the long-term rising trendline. Breach would confirm a primary down-trend with a long-term target of $45/barrel.

Nymex WTI Light Crude

Crude and gold tend to rise and fall together. The long-term chart below compares gold and crude prices adjusted for inflation (CPI).

The bear rally in Gold met resistance below $1250. Reversal below support at $1180 would offer a long-term target of $1050/ounce (the 2015 low).

Spot Gold in USD

Low crude prices tend to strengthen the Dollar (scale inverted on the chart below).

The Dollar Index is testing resistance at 97. Breakout is likely and would further weaken demand for Gold.

Dollar Index

Crude reversal undermines Gold rally

Nymex crude broke support at $65, warning of a primary down-trend with a medium-term target of $56/barrel.

Nymex WTI Light Crude

Crude and gold tend to rise and fall together, over the long-term, and falling crude prices warn of gold weakness.

The bear rally in Gold is likely to meet stubborn resistance at $1250. Reversal below support at $1180 would offer a long-term target of the 2015 low at $1050/ounce.

Spot Gold in USD

Another major influence on Gold prices is Dollar strength. A strong Dollar is synonymous with lower gold prices. The Dollar Index is trending upwards but ran into resistance at 96.50/97.00.

Dollar Index

The reason is not hard to find as China’s central bank (PBOC) stepped in to support the Yuan at 14.5 US cents (6.9 to $1), selling Dollar reserves.

Chinese Yuan

The Aussie Dollar also strengthened as a result.

Australian Dollar

Australian Gold stocks continue to find support because of the weak currency (AUD) but a declining Trend Index warns of long-term weakness. Breach of support at 4500 would signal a primary down-trend.

All Ords Gold Index

Gold rally expected to falter as Dollar strengthens

China’s Yuan continues to weaken while the Dollar index strengthens. Follow-through above 97 would signal another primary advance.

Dollar Index

A strengthening Dollar would weaken demand for Gold. The bear rally is likely to meet stubborn resistance at $1250. Reversal below support at $1180 would warn of a decline to the 2015 low at $1050/ounce.

Spot Gold in USD

The monthly chart of Spot Silver also shows a strong down-trend, testing primary support at $13.50/ounce.

Spot Silver

Crude oil is also showing signs of weakness, with a bearish divergence on the Trend Index. Breach of support at $65/barrel would warn of a primary down-trend.

Nymex Light Crude

In the long-term, gold and oil tend to rise and fall together.

Gold bear rally boosts Aussie miners

China’s Yuan broke support at 14.50, warning of another decline.

Chinese Yuan

A weaker Yuan is likely to lead to Dollar strength. The Dollar Index respected support at 94 and follow-through above 96 would confirm another advance.

Dollar Index

A strengthening Dollar would weaken demand for Gold. Gold broke resistance at $1210/ounce, commencing a bear market rally. Expect resistance at $1250. Reversal below support at $1180 is unlikely at present but would warn of a decline to the 2015 low at $1050/ounce.

Spot Gold in USD

The Aussie Dollar is in a primary down-trend with descending Trend Index peaks below zero warning of strong selling pressure.

Australian Dollar

The combination of a gold bear rally and a weak Aussie Dollar prompted a rally among Australian gold miners. The All Ordinaries Gold Index (XGD) broke resistance at 4900 and is testing 5100. Ascending troughs on the Trend Index indicate buying pressure and a test of 5400 is likely.

All Ordinaries Gold Index