A long-term (monthly) chart shows Crude Oil (WTI Light Crude) has broken below its trend channel and is testing support at $45/barrel.
Weak crude tends to coincide with a strong Dollar. Breakout of the Dollar index above 97 is likely. Rising Trend index troughs indicate buying pressure.
Gold is headed for another test of resistance at $1350/ounce but a strong Dollar is likely to undermine a primary advance.
The All Ordinaries Gold Index broke resistance at 5400/5500, signaling a primary advance with a target of 7000. That will depend on further weakness in the Aussie Dollar and/or a stronger gold price.
Conclusion: We are witnessing a rally in Gold due to global uncertainty but the LT outlook, with declining crude and a stronger Dollar, is still bearish.
Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.
Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.
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.
He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.