A rising dollar, falling crude prices and low inflation all favor a down-trend for gold, while falling long-term interest rates are the only alleviating factor at present.
Gold broke support at $1280, indicating another test of primary support at $1200/ounce. Declining 13-week Twiggs Momentum below zero suggests a primary down-trend. Failure of medium-term support at $1240 would strengthen the bear signal. Breach of primary support would confirm.
* Target calculation: 1200 – ( 1400 – 1200 ) = 1000
Gold Bugs Index, representing un-hedged gold stocks, has not yet followed. Breach of support at 235 would confirm another test of primary support at 205. Reversal of 13-week Twiggs Momentum below zero would strengthen the signal.
Silver, on the other hand is already testing primary support at $18.50/$19.00 per ounce. Breach of support would strengthen the bear signal for gold, while respect would suggest further consolidation.
