The Dollar Index is in a primary down-trend. Short-term support is unlikely to hold. The long-term target is the 2016 low between 92 and 93.
Silver often acts as a lead indicator gold. Testing primary support at $15.50/15.60 per ounce, breach would warn of a primary down-trend.
I have been bullish on gold since the election of Donald Trump as president. My comment last week was:
“Let me put it this way: recovery of gold above $1250 would not be a surprise. And would test resistance at $1300….”
Gold is trending lower, breach of $1215 warning of a test of primary support at $1200.
From a fundamental viewpoint, I can find no strong argument to support a lower gold price:
- The Dollar is falling
- Long-term interest rates are soft
- Trump’s behavior is often erratic
- North Korea successfully test-launched an ICBM, with U.S. Secretary of State Rex Tillerson warning there would not be many good options left on North Korea if the peaceful pressure campaign failed.
So I remain bullish on the long-term outlook for gold. But a peak below zero on Twiggs Trend Index warns of weakness. Breach of primary support at $1200 would mean that all bets are off.