Gold retreats as the Dollar strengthens

China’s Yuan fell sharply against the Dollar on imposition of tariffs by the US. Expect a test of primary support.

Chinese Yuan/US Dollar

The Dollar index strengthened. Follow-through above 98 would signal a fresh advance. The long-term target is 100.

Dollar Index

10-Year Treasury yields are testing support at 2.40%. Breach would offer a target of 2.20%. Rate hikes are a distant memory.

10-Year Treasury Yield

Gold continues to test medium-term support at $1280/ounce. The tall shadow on this week’s candle warns of selling pressure; as does the Trend Index peak at zero. Breach of support would signal a test of primary support.

Spot Gold in USD

Silver continues to fall, heading for a test of primary support at $14. Declining Trend Index peaks indicate selling pressure.

Spot Silver in USD

Gold is likely to follow.

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 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

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

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.

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 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