Nymex crude broke support at $65, warning of a primary down-trend with a medium-term target of $56/barrel.
Crude and gold tend to rise and fall together, over the long-term, and falling crude prices warn of gold weakness.
The bear rally in Gold is likely to meet stubborn resistance at $1250. Reversal below support at $1180 would offer a long-term target of the 2015 low at $1050/ounce.
Another major influence on Gold prices is Dollar strength. A strong Dollar is synonymous with lower gold prices. The Dollar Index is trending upwards but ran into resistance at 96.50/97.00.
The reason is not hard to find as China’s central bank (PBOC) stepped in to support the Yuan at 14.5 US cents (6.9 to $1), selling Dollar reserves.
The Aussie Dollar also strengthened as a result.
Australian Gold stocks continue to find support because of the weak currency (AUD) but a declining Trend Index warns of long-term weakness. Breach of support at 4500 would signal a primary down-trend.
Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He founded PVT Capital (AFSL number 546090), which provides income and growth strategies to wholesale clients.
Colin also co-founded Incredible Charts and writes the popular Patient Investor newsletter.
Using a top-down approach, Colin identifies macro trends in the global economy and then combines fundamental and technical analysis to evaluate opportunities in sectors that stand to benefit.
Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.