Gold and Precious Metals
Gold retreated below support at $1200/ounce. Follow-through below $1180 would indicate another test of primary support at $1140/$1150. Breakout above $1220/ounce is now unlikely. A 13-week Twiggs Momentum peak below zero warns of a primary down-trend. Breach of primary support would signal a decline to $1000/ounce.
* Target calculation: 1200 – ( 1400 – 1200 ) = 1000
Long-term Treasury yields remain in a bear trend, with 10-year yields holding below resistance at 2.00%. Breach of support at 1.85% would signal another test of the primary level at 1.65%. A lower inflation outlook is translating into lower interest rate expectations.
The Dollar Index is likewise encountering resistance at 100. Breakout would signal an advance to 104*. Reversal below 96, however, would test primary support at 94.
* Target calculation: 100 + ( 100 – 96 ) = 104
Gold is also consolidating, ranging between $1180 and $1220/ounce. Reversal below $1180 would signal a decline to $1000/ounce*, while breakout above $1220 would indicate a rally to $1300/ounce.
* Target calculation: 1200 – ( 1400 – 1200 ) = 1000
Apologies for my recent absence. I seem to take longer to recover from a ‘flu virus than I used to. The Dollar Index, however, has made a robust recovery, breaking resistance at 98.50. Completion of a double-bottom suggests a new advance with a target of 104*.
* Target calculation: 100 + ( 100 – 96 ) = 104
Gold retreated below its former primary support level of $1200/ounce as the dollar strengthened. Breach of the rising trendline suggests the bear rally is over; follow-through below $1180 would confirm, strengthening the long-term target of $1000/ounce*.
* Target calculation: 1200 – ( 1400 – 1200 ) = 1000
Ten-year Treasury Note yields are testing support at 1.85% after consolidating below 2.00% for 2 weeks. 13-Week Twiggs Momentum below zero continues to indicate a primary down-trend. Failure of support at 1.85% would test primary support at 1.65%.
Correction on the Dollar Index has lasted 3 weeks but continues to respect the first line of support at 95.50. Rising 13-week Twiggs Momentum also continues to indicate a strong (primary) up-trend. Recovery above 100 is likely and would offer a target of 110*.
* Target calculation: 100 + ( 100 – 90 ) = 110
Gold is testing resistance at $1200/ounce on the back of softer interest rates and a weak dollar. Breakout above $1220/ounce would indicate a rally to $1300. But 13-week Twiggs Momentum below zero continues to indicate a primary down-trend. Respect of $1300, or reversal below $1180 would suggest another test of primary support at $1140/$1150.
* Target calculation: 1200 – ( 1400 – 1200 ) = 1000
Ten-year Treasury Note yields are re-testing resistance at 2.00%. Recovery above 2.25% would indicate the correction is over and a rally to test the key resistance level of 3.00%. 13-Week Twiggs Momentum below zero, however, continues to indicate a primary down-trend. Failure of support at 1.85% would signal a test of 1.65%.
The Dollar retreated from long-term resistance at 100 as expectations of higher interest rates eased. Rising 13-week Twiggs Momentum signals a strong (primary) up-trend. Respect of support at 95.5 would confirm.
* Target calculation: 100 + ( 100 – 90 ) = 110
Gold rallied on the back of a soft dollar and weak interest rate outlook, but failed to hold above $1200/ounce. 13-Week Twiggs Momentum below zero continues to indicate a primary down-trend. Follow-through below $1180 would warn of another test of support at $1140/$1150, while a rise above $1220 would test $1300.
* Target calculation: 1200 – ( 1400 – 1200 ) = 1000
The Fed Open Market Committee (FOMC) dropped the word “patient”, but market bulls responded positively to its “dovish” post-meeting statement. Jeff Cox at CNBC writes:
… the mostly dovish statement made little fanfare over eliminating the word, and in fact stated specifically that “an increase in the target range for the federal funds rate remains unlikely at the April FOMC meeting,” a phrase missing from previous communiques……
“The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term,” the statement said.
Like I said: “…. Janet Yellen will move when the time is right. And not before.”
Ten-year Treasury Note yields broke through 2.00%, warning of another test of primary support at 1.65%. 13-Week Twiggs Momentum below zero continues to signal a down-trend. Recovery above 2.00% is unlikely, but would signal a rally to 2.50%.
The Dollar retreated from long-term resistance at 100. Rising 13-week Twiggs Momentum signals a strong (primary) up-trend. Respect of support at 95.5 would indicate continuation of the trend.
* Target calculation: 100 + ( 100 – 90 ) = 110
Gold rallied on the back of a softer dollar and weaker interest rate outlook. Expect a rally to test $1200/ounce, but respect of this level would reinforce the primary down-trend. Breach of support at $1140/$1150 would confirm. 13-Week Twiggs Momentum below zero strengthens the bear signal.
* Target calculation: 1200 – ( 1400 – 1200 ) = 1000
Ten-year Treasury Note yields are testing support at 2.00%. Recovery above 2.50% would indicate another test of 3.00%. But 13-week Twiggs Momentum below zero continues to signal a down-trend. Another peak below zero would warn of a decline to test the all-time low at 1.40%. Breakout above 3.00% appears remote at present, but would signal the end of the secular (20+ year) down-trend.
The Dollar is on a tear, testing long-term resistance at 100. Rising 13-week Twiggs Momentum signals a strong (primary) up-trend. Breakout would offer a new target of 110*, but first expect retracement to confirm the new support level.
* Target calculation: 100 + ( 100 – 90 ) = 110
Gold fell through long-term support at $1200 and is testing the last line of support at the recent lows of $1140/$1150 per ounce. Reversal of 13-week Twiggs Momentum below zero warns of another (primary) decline, with a target of $1000*. Breach of support at $1140 would confirm.
* Target calculation: 1200 – ( 1400 – 1200 ) = 1000
The 5-year breakeven rate for inflation — calculated by deducting the yield on 5-year TIPS from the 5-Year Treasury yield — rallied in recent weeks and is testing resistance at 1.60%. But the long-term trend is down and we should expect another test of support at 1.2%.
Apart from Japan, deflationary pressures are rising in all major OECD countries. Given the global trend, the Fed is likely to raise interest rates at a leisurely pace. Expect low inflation and low interest rates for the next 2 to 3 years.
Can you spot the direction of the trend? pic.twitter.com/75Gq9cAENp
— David Schawel (@DavidSchawel) March 1, 2015
10-Year Treasury yields rallied along with the inflation breakeven and are now testing resistance at 2.15%. Breakout would test the descending trendline around 2.40%. But reversal below 2.0% remains as likely and would signal another test of 1.65%.
The Dollar Index broke through resistance at 95.50, offering a medium-term target of 100*.
* Target calculation: 90 + ( 90 – 80 ) = 100
Low inflation undermines support for gold. Spot Gold is testing long-term support at $1200/ounce. Reversal of 13-week Twiggs Momentum below zero warns of another decline. Breach of support at $1200 would signal another decline, while follow-through below $1150 would confirm.
* Target calculation: 1200 – ( 1400 – 1200 ) = 1000
The prospect of higher interest rates is fast approaching, but 10-Year Treasury yields retreated below 2.0%, warning of another test of the December low at 1.40%.
The weight of foreign purchases, for reasons other than yield (dollar peg/currency manipulation), may be overwhelming the market response. This has happened before, in 2004/2005, when the Fed was alarmed to find that long-term yields failed to respond to monetary tightening. The graphs below are from a 2012 report by DO Beltran (and others) at the Fed. The Fed Funds Rate was steadily increased between mid-2004 and the end of 2005, but 10-year yields declined slightly over the same period.
The reason was fairly obvious: a massive surge in foreign purchases (mainly from China) had left the long-term market awash with liquidity. US monetary policy was effectively being controlled from Beijing.
I cannot understand why this abuse has been tolerated.
The Dollar Index has been consolidating for the last 5 weeks, but the narrow range is a bullish sign and the Dollar is likely to strengthen further. Breakout would offer a medium-term target of 100*.
* Target calculation: 90 + ( 90 – 80 ) = 100
Spot Gold is testing support at $1200/ounce. Reversal of 13-week Twiggs Momentum below zero warns of another decline. A trough below the zero line would strengthen the bear signal.
* Target calculation: 1200 – ( 1400 – 1200 ) = 1000
The strong Dollar, low inflation and higher interest rates all point to another decline, but so far support has held firm. Completion of another trough at this level would strengthen the argument that gold is forming a long-term bottom. Possibly with help from Beijing.
10-Year Treasury Yields found support above the December low of 1.40%, recovering above medium-term resistance at 2.00%. The outlook is hardening around a Fed increase in short-term rates by mid-year. A higher trough would suggest that the long-term down-trend in yields, shown below on an annual chart, is coming to a close. But only breakout above resistance at 3.00% would confirm that the secular bull-trend in bonds has ended.
The Dollar is strengthening on the back of low inflation and expectations of higher rates — bearish signs for gold.
Spot Gold remains in a bear trend, testing support at $1200/ounce.
Reversal of 13-week Twiggs Momentum below zero warns of another decline. A weekly close below $1180 would strengthen the bear signal.
* Target calculation: 1200 – ( 1400 – 1200 ) = 1000
