Gold – further falls likely

Low interest rates increase demand for gold by lowering the carrying cost. A rising dollar, however, has the opposite effect.

Gold respected resistance at $1250/ounce, confirming the primary down-trend. Another 13-week Twiggs Momentum peak below zero strengthens 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.

Spot Gold

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

Gold Bugs Index, representing un-hedged gold stocks, fell sharply since breaching long-term support at 190. Declining 13-week Twiggs Momentum (below zero) signals a strong primary decline. Bearish for gold.

Gold Bugs Index

The price of gold adjusted for inflation (gold/CPI) remains relatively high and further falls are likely.

Gold adjusted for CPI

One Reply to “Gold – further falls likely”

  1. Re: AUDUSD
    Just having a look at A6Z14 (AUD Futures) …
    Is that a bearish pennant I see forming?
    From the recent High c93.30 to the low c86.50 there appears to be an upward facing (narrowing) pennant.
    I do not believe it is going to break to the upside – so that suggests a bull trap downside break with a target of sub 80.
    Commodities do not appear to be in a rally pre Xmas move, so little AUD suuport there.
    Any thoughts?

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