Gold retreated below support at $1400, indicating the end of the bear rally. Expect a test of primary support at $1320/$1340. Yesterday’s long tail is evidence of short-term buying pressure, so breach of primary support is not a certainty. Respect would suggest another test of $1400.
* Target calculation: 1350 – ( 1500 – 1350 ) = 1200
The Dollar Index is retreating after a false break above 84 on the monthly chart. Breach of support at 79 would complete a double top, signaling reversal to a down-trend. Fall of 13-week Twiggs Momentum below zero would strengthen the bear signal. Respect of the rising trendline remains as likely, however, and would signal a long-term advance to 89/90.
Crude is consolidating, with Brent likely to continue the down-trend after breaking support at $100/barrel. Respect of resistance at $106 would strengthen the signal. Nymex WTI, however, is headed for resistance at $98. Breakout would signal an advance, but reversal below $90 is as likely and would test support at $85/barrel. The spread between the two is likely to narrow as the European economy under-performs the US.
A weakening Shanghai Composite Index is being followed lower by the Dow Jones/UBS Commodity Index. Breach of medium-term support at 130 would signal a test of primary support at 125/126. Commodities remain in a primary down-trend and are likely to stay there unless China resumes major infrastructure investment. Not good news for Australian resources stocks.