Gold finds support as Euro falls

• Treasury yields warn of a decline
• Euro trending lower
• Dollar halts at resistance
• Gold finds short-term support

Interest Rates and the Dollar

The yield on ten-year Treasury Notes retreated below 2.50 percent, warning of a decline to 2.00 percent*. Follow-through below 2.40 would confirm. 13-Week Twiggs Momentum below zero strengthens the signal. Reversal above 2.65 is unlikely, but indicate an advance to 3.00 percent.

* Target calculation: 2.50 – ( 3.00 – 2.50 ) = 2.00

The euro is in a primary down-trend, having broken primary support at $1.35. Target for the initial decline is $1.30*. Declining 13-week Twiggs Momentum below zero confirms the down-trend. Recovery above $1.35 is unlikely, but would warn of a bear trap.

* Target calculation: 1.35 – ( 1.40 – 1.35 ) = 1.30

The Dollar Index has run into resistance at 81.50, evidenced by tall wicks (“shadows”) on the last two weekly candles. Weakness in Europe is likely to drive the Dollar higher, while lower treasury yields would retard the advance. Recovery of 13-week Twiggs Momentum above zero suggests a primary up-trend. Breakout above 81.50 would signal a primary advance to 84*. Reversal below 81.00 is unlikely, but would warn of another test of primary support at 79.00.

* Target calculation: 81.50 – ( 81.50 – 79.00 ) = 84.00

Gold

Gold found short-term support at $1280/$1300. Oscillation of 13-week Twiggs Momentum around zero continues to indicate hesitancy. Breach of support at $1240/$1250 would warn of a primary down-trend. Recovery above $1350 remains unlikely at present, but would indicate another test of $1400/$1420.

* Target calculation: 1200 – ( 1400 – 1200 ) = 1000