Silver warns of further Gold weakness

Precious metals tend to trend or consolidate together, driven by similar investor motives. Spot silver is testing primary support at $14 per ounce, while a Trend Index peak at zero warns of selling pressure. Breach of support would signal a primary down-trend.

Spot Gold in USD

Gold is still testing support at $1200/ounce but Trend Index peaks below zero warn of selling pressure. Respect of the descending trendline indicates another decline with a long-term target of the 2015 low at $1050/ounce, similar to silver.

Spot Gold in USD

Currencies

The Yuan continues to test support at 14.5 US cents.

CNY/USD

The Dollar Index continues to test support at 95, despite the weak Yuan. Bearish divergence on the Trend Index warns of selling pressure but long tails indicate support. Breach of support at 95 is uncertain but would signal a correction to test 91 — boosting demand for gold.

Dollar Index

The Australian Dollar continues a strong down-trend, with Trend Index peaks below zero warning of selling pressure. Expect a test of the 2015/2016 low at 70 US cents.

Australian Dollar/USD

Gold Stocks

The falling Aussie Dollar has partially cushioned local gold stocks from weaker gold prices but gold is more volatile than the Dollar. The All Ordinaries Gold Index (XGD) is expected to break support at 4550, offering a long-term target of 4000/4100.

All Ordinaries Gold Index

Gold stocks face selling pressure despite plunging Aussie Dollar

The Yuan continues to test support at 14.5 US cents.

CNY/USD

The Dollar Index recovered above support at 95. Respect of support would confirm another advance, with a long-term target of 103, but bearish divergence on the Trend Index still warns of selling pressure.

Dollar Index

Gold is testing resistance at $1200/ounce but Trend Index peaks below zero warn of strong selling pressure. Respect of the descending trendline would indicate another decline with a long-term target of the 2015 low at $1050/ounce.

Spot Gold in USD

The Australian Dollar is plunging, having broken short-term support at 72 US cents. Trend Index peaks below zero indicate strong selling pressure. Expect a test of the 2015/2016 low at 70 US cents.

Australian Dollar/USD

The falling Aussie Dollar may cushion local gold stocks, to some extent, from weaker gold prices but the All Ordinaries Gold Index (XGD) continues its downward path. Tall shadows on the last three candles flag selling pressure. Breach of short-term support at 4550 is likely and would offer a long-term target of 4000/4100.

All Ordinaries Gold Index

Gold reacts to Dollar weakness

The Yuan continues to find support at 14.5 US cents.

CNY/USD

The Dollar Index is testing support at 95. Respect of support would confirm another advance, with a long-term target of 103, but declining Trend index peaks warn of selling pressure.

Dollar Index

Gold rallied to $1200/ounce but failed to make further progress. Respect of the descending trendline would warn of another decline with a long-term target of the 2015 low at $1050/ounce.

Spot Gold in USD

The Australian Dollar respected resistance at 73.50 US cents, warning of another decline. Trend Index peaks below zero reflect selling pressure.

Australian Dollar/USD

The All Ordinaries Gold Index (XGD) continues its downward path, tall shadows on the last two candles reflecting selling pressure. Breach of short-term support at 4550 is likely and would offer a long-term target of 4000/4100.

All Ordinaries Gold Index

Support for the Yuan lifts Gold

China’s PBOC stepped in with belated support for the Yuan, holding the line at 14.5 US cents.

CNY/USD

The Dollar retreated, with the Dollar Index testing support at 95. Respect of support would confirm another advance, with a long-term target of 103 — if central banks like the Fed and PBOC don’t intervene.

Dollar Index

Gold rallied as the Dollar weakened, testing resistance at $1200/ounce. Respect of the descending trendline would warn of another decline with a long-term target of the 2015 low at $1050/ounce.

Spot Gold in USD

The Australian Dollar also rallied, reducing the benefit to local gold miners.

Australian Dollar/USD

The All Ordinaries Gold Index (XGD) continues its downward path, with a long-term target of 4000/4100.

All Ordinaries Gold Index

China is conserving its capital account as best it can, after losing $1 trillion in foreign reserves supporting the Yuan in 2015 – 2016.

China: Foreign Reserves excluding Gold

But failure to support its currency is sure to antagonize the Trump administration and elicit further trade tariffs.

….Trade is drying up and China is stuck with debt it can’t repay or rollover easily. This marks the end of China’s Cinderella growth story, and the beginning of a period of economic slowdown and potential social unrest.

~ Jim Rickards at Daily Reckoning

If that’s the case, expect the Dollar to strengthen and further gold weakness.

Gold stocks hammered

China’s Yuan continues to fall.

CNY/USD

Causing the US Dollar to strengthen. Dollar Index follow-through above resistance at 95 suggests further gains unless China intervenes to support the Yuan. Long-term target for the advance is 103.

Dollar Index

Gold plunged through support at $1200/ounce. Expect a test of primary support at $1130 but the long-term target is the 2015 low of $1050/ounce.

Spot Gold in USD

A Trend Index peak below zero warns of a strong decline on the Australian Dollar.

Australian Dollar/USD

But Aussie weakness was not enough to shield local gold miners. The All Ordinaries Gold Index (XGD) broke support at 4900, offering a long-term target of 4100.

All Ordinaries Gold Index

Local gold stocks are getting hammered, as I feared.

No Silver lining for Gold stocks

A long-term chart shows Silver broke support at $16/ounce and is headed for a test of its 2015 low at $14.

Spot Silver in USD

Silver is more volatile but often indicates, ahead of Gold, the direction of the two precious metals. At present that suggests Gold is likely to test its 2015 low of $1050/ounce.

Spot Gold in USD

China’s Yuan continues to fall against the US Dollar.

CNY/USD

The Dollar Index followed through after breaking resistance at 95. Retracement to test the new support level is now unlikely unless China intervenes to support the Yuan. Focus shifts to the long-term target of 103.

Dollar Index

The Australian Dollar broke support at 73 US cents, the Trend Index peak below zero warning of a strong decline. This may cushion local gold miners, to some extent, from the falling US Dollar price but Gold is more volatile.

Australian Dollar/USD

The All Ordinaries Gold Index (XGD) continues to test support at 4900. Breach is likely and would offer a long-term target of 4100.

All Ordinaries Gold Index

Not a good time to buy Gold stocks.

Dollar strength hurts Aussie gold stocks

China’s Yuan continues its steep descent against the US Dollar.

CNY/USD

The weakening Yuan strengthened demand for Dollars, with the Dollar Index breaking through strong resistance at 95. Expect retracement to test the new support level. Respect would confirm the long-term target at the 2016/2017 highs of 103.

Dollar Index

The strong Dollar weakened demand for Gold, with the spot price heading for $1200/ounce after breaching short-term support at $1220.

Spot Gold in USD

A long-term gold chart shows likely support levels at $1150 and $1050/ounce.

Spot Gold in USD - Quarterly

The Australian Dollar continues to range between 73.50 and 75.00 US cents, leaving local gold miners exposed to the falling Dollar price.

Australian Dollar/USD

The All Ordinaries Gold Index (XGD) is testing support at 4900. Breach is likely and penetration of the rising trendline warns of a strong decline, with a LT target of 4100.

All Ordinaries Gold Index

A sharp fall in the Aussie Dollar would soften the blow. But hope isn’t a strategy.

Gold breaches primary support

The Dollar price of gold breached support at $1240/ounce, signaling a primary down-trend. A long tail indicates active buyers and we can expect retracement to test the new resistance level at $1250.

Spot Gold in USD

The Dollar Index continues to test strong resistance at 95.

Dollar Index

But Chinese selling to support the Yuan has not materialized in sufficient magnitude to reverse Dollar strength. Dollar Index breakout above 95 is likely to spur selling of gold.

CNY/USD

The Australian Dollar has not weakened sufficiently to protect local gold miners, with the price of Gold in Australian Dollars falling sharply.

Gold Price in AUD

The All Ordinaries Gold Index (XGD) broke support at 4950. Expect a test of 4600.

All Ordinaries Gold Index

Downside risk to Australian gold stocks is rising.

Trade tariff impact on China & Australia

The yuan is falling as threat of a tariff war rises.

Yuan

The Shanghai Composite Index is testing its 2016 low at 2700. Breach would warn of a decline to the 2014 low at 2000.

Shanghai Composite Index

Commodity prices are plunging in anticipation of falling demand from China.

DJ-UBS Commodity Index

Chinese monthly iron ore imports are down at 83.24 mt, compared to earlier peaks of 100 mt earlier in 2017. Iron ore spot price is testing primary support $63/tonne. A Trend Index peak below zero warns of selling pressure. Breach of support is likely and would warn of a decline to $58/tonne.

Iron Ore

A falling Aussie Dollar may cushion local resources stocks from some of the impact.

Australian Dollar

But ASX 300 Metals & Mining index continues to test medium-term support at 3800. Breach of support is likely and would warn of a correction to test the rising trendline.

ASX 300 Metals & Mining

Resources stocks remain in a primary up-trend but I am bearish on the medium-term outlook.

Gold, Dollar and the Yuan

China’s Yuan fell sharply over the last 3 weeks, with the threat of US trade tariffs.

Dollar/Yuan

Risk of capital flight will force the PBOC to sell foreign reserves to support the Yuan. It took $1 trillion to stem the last fall, so expect a sizable sell-off in Chinese holdings of US Dollar assets, mainly Treasuries and mortgage-backed securities. The outflow is likely to weaken the Dollar, which is likely to strengthen Gold.

The Dollar Index encountered stubborn resistance at 95. Respect would warn of another correction.

Dollar Index

Gold found support at $1250/ounce. Respect of the primary support level would suggest another rally.

Spot Gold

The Aussie Dollar is likely to strengthen if the US Dollar falls.

AUDUSD

A stronger US Dollar is expected to be mildly bullish for Australian gold stocks, with a stronger Aussie Dollar offsetting some of the gains.

The All Ordinaries Gold Index broke through resistance at 5250, signaling a primary advance with a target of 6000. Follow-through above 5300, after the recent retracement, would strengthen the signal.

All Ordinaries Gold Index