Low interest rates strengthen demand for gold as they reduce the carrying cost. A rising dollar, however, would reduce demand.
Gold encountered stubborn resistance at $1250/ounce. Respect would confirm the primary down-trend. Another 13-week Twiggs Momentum peak below zero would strengthen the signal. Breach of primary support at $1180 would offer a long-term target of $1000*. Recovery above $1250 is unlikely, but would test the descending trendline around $1300.
* Target calculation: 1200 – ( 1400 – 1200 ) = 1000
Gold Bugs Index, representing un-hedged gold stocks, broke long-term support at 190, signaling another primary decline. Gold is likely to follow.
Silver failed to rally in concert with gold, instead consolidating in a narrow range which suggests further weakness. Another bearish sign for gold.
