Category: Gold & Commodities

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Spot gold tests $1530

The Dollar Index followed through after last week’s breakout above resistance at 81.50/82.00, confirming the fresh advance signaled by a 63-day Twiggs Momentum trough above zero. Target for the advance is 86.00*.

US Dollar Index

* Target calculation: 82 + ( 82 – 78 ) = 86

On the daily chart, spot gold tests medium-term support at $1530/ounce. Long tails indicate buying support but the rising dollar continues to apply downward pressure. Breach of support and follow-through below $1500 would signal a long-term decline to $1200/ounce*. Declining 63-day Twiggs Momentum (below zero) already indicates a primary down-trend. Recovery above $1600 is less likely but would indicate that the down-trend is weakening.

Spot Gold

* Target calculation: 1500 – ( 1800 – 1500 ) = 1200

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Gold suffers from strong dollar

The US Dollar Index broke resistance at 81.80, signaling the start of a primary advance to 86.00*. The 63-day Twiggs Momentum trough above zero indicates a strong up-trend. Expect retracement to test the new support level at 81.50/81.80. Respect would confirm the bull signal.

Dollar Index

* Target calculation: 82 + ( 82 – 78 ) = 86

Spot Gold is testing the band of support between $1500 and $1550/ounce. Wednesday’s long tail is evidence of buying support, but declining 63-day Twiggs Momentum (below zero) warns of a primary down-trend. Another rally that respects resistance at $1600 would strengthen the bear signal. Breakout below $1500 would confirm, offering a target of $1200*. Recovery above $1600, while unlikely, would suggest another test of $1800.

Spot Gold

* Target calculation: 1500 – ( 1800 – 1500 ) = 1200

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Crude: Brent and WTI Light

Brent Crude is broke medium-term support at $110/barrel and is headed for a test of the band of primary support between $100 and $103/barrel. Failure would indicate a long-term decline to $75/barrel*. Reversal of 63-day Twiggs Momentum below zero already warns of a primary down-trend.

ICE Brent Afternoon Markers

* Target calculation: 100 – ( 125 – 100 ) = 75

Nymex WTI Light Crude followed through below $90/barrel, signaling a primary down-trend. Reversal of 63-day Twiggs Momentum below zero strengthens the signal. Expect a test of the 2011 low at $75/barrel (similar to Brent Crude).

Nymex WTI Light Crude

* Target calculation: 92 – ( 110 – 92 ) = 76

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Commodities fall, stocks follow

The CRB Commodities Index is headed for a test of the 2010 low of 250 after breaking primary support at 295. The trough below zero on 63-day Twiggs Momentum indicates a strong primary down-trend. Divergence between the S&P 500 Index and commodities warns that stocks are over-priced and likely to follow.

CRB Commodities Index and S&P 500 Index

* Target calculation: 295 – ( 325 – 295 ) = 265

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Chinese economics: Is iron ore demand real?

Reuters video: Nicholas Zhu, ANZ Bank head of macro-economic data Asia, examines iron ore stockpiles at Qingdao port.

[gigya src=’http://www.reuters.com/resources_v2/flash/video_embed.swf?videoId=235214214&edition=BETAUS’ type=’application/x-shockwave-flash’ allowfullscreen=’true’ allowScriptAccess=’always’ width=’460′ height=’259′ wmode=’transparent’]

Hat tip to Houses and Holes

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Commodities point to lower stock prices

The CRB Commodities Index broke support at 295, warning of another primary decline. Respect of zero by 63-day Twiggs Momentum strengthens the signal. Divergence between the S&P 500 Index and commodities warns that stocks are over-priced and likely to fall.

CRB Commodities Index and S&P 500 Index

* Target calculation: 295 – ( 325 – 295 ) = 265

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Crude: Brent and WTI Light

Nymex WTI Light Crude broke support at $96/barrel, warning of a primary down-trend. Reversal of 63-day Twiggs Momentum below zero strengthens the signal, while follow-through below $93 would confirm.

Nymex WTI Light Crude

* Target calculation: 95 – ( 110 – 95 ) = 80

Brent Crude is testing medium-term support at $110/barrel. Failure would indicate a fall to the primary level at $103. Follow-through below $100 would offer a long-term target of $75/barrel*. Reversal of 63-day Twiggs Momentum below zero would strengthen the bear signal.

ICE Brent Afternoon Markers

* Target calculation: 100 – ( 125 – 100 ) = 75

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Dollar rallies while Gold & Silver fall

The Dollar Index is testing primary resistance at 81.50 on the weekly chart. Respect of zero by the latest 63-day Twiggs Momentum trough suggests continuation of the primary up-trend. Follow-through above 82 would signal an advance to 86*.

US Dollar Index

* Target calculation: 82 + ( 82 – 78 ) = 86

Spot Gold broke support at $1550/ounce on the daily chart. Expect retracement to test the new resistance level at $1600 but a sharp fall below zero by 63-day Twiggs Momentum warns of a primary down-trend. Breach of support at $1500 would confirm, offering a long-term target of $1200*.

Spot Gold

* Target calculation: 1500 – ( 1800 – 1500 ) = 1200

Spot Silver is testing primary support at $26/ounce. 63-Day Twiggs Momentum oscillating below zero already indicates a primary down-trend. Breach of support would offer a target of $16/ounce*.

Spot Silver

* Target calculation: 26 – ( 36 – 26 ) = 16

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Crude oil falls

Both Brent Crude and Nymex Light Crude are falling, with signs that the global economy is slowing and that tensions with Iran are easing. Brent is close to the 61.8% Fibonacci retracement level and a fall below $110/barrel would test primary support at $100. Reversal of 63-day Twiggs Momentum below zero would warn of a primary down-trend — and confirm a European recession. Recovery above $115 remains as likely, however, and would suggest a new primary advance.

ICE Brent Afternoon Markers Weekly Chart

Nymex WTI Light Crude has already penetrated its rising trendline and support at $103/barrel. Reversal of 63-day Twiggs Momentum below zero would strengthen the bear signal. Failure of support at $96 would confirm a primary down-trend — and warn of US recession.

Nymex WTI Light Crude Weekly Chart

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