Posted on

Gold breaks support

The Dollar price of gold has broken support at $1240/ounce, signaling a primary down-trend.

Spot Gold in USD

The Dollar Index continues to test resistance, consolidating in a narrow band below 95, a bullish sign. Chinese selling of the Dollar, to support the Yuan, has not materialized in sufficient magnitude to reverse Dollar strength. Breakout above 95 would spur selling of gold.

Dollar Index

The Australian Dollar has not weakened sufficiently to protect local gold miners. The All Ordinaries Gold Index (XGD) is heading for a test of support at 4900/4950. Given the circumstances, support is unlikely to hold. Expect a test of 4600.

All Ordinaries Gold Index

Posted on

Gold tests support

China continues to support the Yuan and we can expect consolidation around 15 US cents. Threat of trade tariffs is weakening the Yuan, forcing the PBOC to sell off foreign reserves to prevent a downward spiral as investors flee and borrowers hedge against the stronger Dollar.

Dollar/Yuan

PBOC sale of foreign reserves, mainly held in US Treasuries and mortgage-backed securities, would drive up yields and weaken the Dollar. The Dollar Index continues to test resistance at 95. Respect is likely and would warn of another correction. While unlikely, breakout above 95 would signal that the PBOC is sitting on its hands while the Dollar advances to an initial target of 100.

Dollar Index

Gold is testing primary support at $1240/ounce. A stronger Dollar would breach support, warning of a decline to $1150. Respect of primary support is more likely and would signal another rally.

Spot Gold

The price of gold in Australian Dollars has been edging up over the past few years as the Aussie Dollar weakens. But the monthly chart below shows that Gold (USD) has fallen faster than the Aussie Dollar over the last 3 months. Large bearish divergence on the Trend Index indicates selling pressure. Breach of support at $1650 (AUD) and the rising trendline would warn of a reversal.

Gold in Aussie Dollars

The All Ordinaries Gold Index is a bit stronger, having broken through resistance at 5000. A correction that respects the rising trendline and new support level at 5000 would confirm the primary advance, with a target of 6000.

All Ordinaries Gold Index

Posted on

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

Posted on

Aussie Gold breakout

The All Ordinaries Gold Index broke through resistance at 5250, signaling a primary advance with a target of 6000. I remain cautious while the Dollar-price of Gold is falling; respect of Gold support at $1250/ounce would strengthen the bull signal.

All Ordinaries Gold Index

The Aussie Dollar continues to fall, boosting local gold stocks.

AUDUSD

Despite the Dollar-price of gold heading for a test of primary support between $1240 and $1250. Trend Index peaks below zero flag selling pressure.

Spot Gold

Largely because the Dollar is strengthening, with the Dollar Index breaking through resistance at 95 to signal continuation of the recent advance.

Dollar Index

A sharp fall in China’s Yuan is unsettling global financial markets.

Dollar/Yuan

The normal response to uncertainty is a flight to safety which boosts the Dollar, Yen and Gold. But this looks like a straight arm-wrestle between the Yuan and the Dollar, with strong demand for the greenback weakening the Dollar-price of Gold.

Posted on

Gold weakens as Dollar dominates

The Dollar Index continues to test resistance at 95.

Mohammed El-Erian believes the Dollar is underpriced:

“…the dollar index is now at a 2018 high and, IMO, markets as a whole are yet to price fully the growth and policy differentials that favor the US over many other countries.”

Dollar Index

Expect another test of short-term support at 93.20 but respect is likely and breakout above 95 would signal another advance.

A strong Dollar would suggest weaker gold prices (in Dollars). Spot gold breached support at $1280/ounce, warning of a test of primary support between $1240 and $1250. Trend Index peaks below zero flag selling pressure.

Spot Gold

Australian gold stocks face a different set of drivers. The strong greenback weakened the Aussie Dollar, breach of primary support at 75 warning of a decline to 70 US cents. A long tail on the latest candle suggests a continuing arm-wrestle between buyers and sellers. But the Trend Index peak below zero indicates, in the medium-term, that sellers outweigh buyers.

AUDUSD

Buoyed by a weaker Aussie Dollar, the All Ordinaries Gold Index is rallying to test resistance at 5250. Breakout would signal another advance but retracement is likely to first test support at the rising trendline.

All Ordinaries Gold Index

Posted on

Aussie gold stocks rally as the greenback strengthens

The Dollar Index rallied to test resistance at 95 in response to the latest Fed rate hike. Short retracement is a bullish sign.

Dollar Index

Spot Gold retreated to $1280/ounce. Penetration of the rising trendline warns of a correction to test primary support at $1250. A Trend Index peak below zero warns of strong selling pressure.

Spot Gold

Fortunately for Australian gold stocks, the Aussie Dollar broke primary support at 75, warning of a decline to 69/70 US cents. The Trend Index peak below zero warns of strong selling pressure.

AUDUSD

The weaker Aussie Dollar boosted local gold stocks, with the All Ordinaries Gold Index breaking through resistance at 5100. Follow-through above 5250 would confirm another advance but expect retracement to first test the new support level.

All Ordinaries Gold Index

Posted on

Gold benefits from Dollar weakness

The Dollar Index encountered resistance at 95 and is now retracing to find support. Support above 91 would be bullish, while breach of 91 would see another test of primary support at 88.50.

Dollar Index

10-Year US Treasury yields are likely to face stubborn resistance at 3.0 percent until threats to the European Union emanating from Italy’s new populist government are resolved. Breakout above 3.0 percent would signal the end of the 3 decades-long secular bull market in bonds — and increase selling pressure on gold.

10-Year Treasury Yield

Spot Gold, benefiting from the weaker Dollar, respected its rising trendline. Recovery above $1300/ounce would suggest another rally, while crossover of the Trend Index above zero would strengthen the signal.

Spot Gold

Australia’s All Ordinaries Gold Index continues its struggle with resistance at 5100, while the Aussie Dollar holds above support at 75 US cents. Penetration of the rising trendline at 4950 would warn of a correction to test primary support at 4600. Breakout above 5100 remains more likely, with a rising trend Index indicating moderate buying pressure.

All Ordinaries Gold Index

The Australian Dollar met resistance at its descending trendline, around 76.75 US cents. Expect another test of primary support at 75. If a Trend Index peak forms below zero, that would warn of strong selling pressure. Breach of primary support at 75 would signal a decline to 69/70 US cents — and strong demand for Australian gold stocks.

AUDUSD

Posted on

Gold benefits from Dollar weakness

The Dollar Index encountered resistance at 95 and is now retracing to find support. Support above 91 would be bullish, while breach of 91 would see another test of primary support at 88.50.

Dollar Index

10-Year US Treasury yields are likely to face stubborn resistance at 3.0 percent until threats to the European Union emanating from Italy’s new populist government are resolved. Breakout above 3.0 percent would signal the end of the 3 decades-long secular bull market in bonds — and increase selling pressure on gold.

10-Year Treasury Yield

Spot Gold, benefiting from the weaker Dollar, respected its rising trendline. Recovery above $1300/ounce would suggest another rally, while crossover of the Trend Index above zero would strengthen the signal.

Spot Gold

Australia’s All Ordinaries Gold Index continues its struggle with resistance at 5100, while the Aussie Dollar holds above support at 75 US cents. Penetration of the rising trendline at 4950 would warn of a correction to test primary support at 4600. Breakout above 5100 remains more likely, with a rising trend Index indicating moderate buying pressure.

All Ordinaries Gold Index

The Australian Dollar met resistance at its descending trendline, around 76.75 US cents. Expect another test of primary support at 75. If a Trend Index peak forms below zero, that would warn of strong selling pressure. Breach of primary support at 75 would signal a decline to 69/70 US cents — and strong demand for Australian gold stocks.

AUDUSD

Posted on

Falling bond yields fail to tame Gold bears

10-Year Treasury yields retreated below 3.0 percent after threatening a bond bear market for the past week.

10-Year Treasury Yield

Breakout above 3.0 percent would complete a large double bottom reversal in the secular down-trend.

10-Year Treasury Yield

Rising bond yields would be expected to weaken demand for gold as the opportunity cost of holding precious metals increases.

The other major influence on gold prices, the Dollar, continues to strengthen. A strong Dollar would weaken the Dollar-price of gold.

The Dollar Index is rallying to test resistance at 95. Penetration of the long-term descending trendline in April suggests that a bottom is forming. Bullish divergence on the Trend Index indicates buying pressure.

Dollar Index

Spot Gold retraced to test the new resistance level at $1300/ounce — the former support level. The declining Trend Index indicates selling pressure and respect of the descending trendline would warn of a test of primary support at $1250/ounce.

Spot Gold

Australian gold stocks fared better, with the All Ordinaries Gold Index finding support at 4950 and the rising Trend Index signaling buying pressure. Respect of the long-term trendline would confirm another primary advance.

All Ordinaries Gold Index

The reason is not hard to find. The Australian Dollar is at a watershed, testing primary support at 75 US cents as the greenback rallies. A Trend Index peak below zero would warn of strong selling pressure. And breach of primary support would signal a decline to 69/70 US cents.

AUDUSD

Offering a potential bull market for Aussie gold stocks.

Posted on

Gold stocks retreat

The Dollar rally continues, with the Dollar Index heading for a test of resistance at 95. Penetration of the long-term descending trendline suggests that a bottom is forming. Bullish divergence on the Trend Index indicates buying pressure.

Dollar Index

But rising crude prices still threaten to weaken the Dollar.

WTI Light Crude

Spot Gold broke support at $1300, warning of a test of primary support at $1250/ounce as the Dollar strengthens. The declining Trend Index indicates selling pressure.

Spot Gold

A weakening Australian Dollar continues to test support at 75 US cents as the greenback rallies. Breach would offer a long-term target of 69/70 US cents.

AUDUSD

The weaker Aussie Dollar offered some respite for local gold stocks but the All Ordinaries Gold Index is retracing to test its new support level at 4950/5000. Respect of the rising trendline would confirm a fresh advance and long-term target of 6000.

All Ordinaries Gold Index