China’s Yuan has paused after breaking above 7.0 to the US Dollar. Expect further consolidation, but respect of support at 7.0 would signal a further advance (and Yuan weakness), fueling demand for Gold.
Spot Gold is consolidating above $1500/ounce. Respect of support at $1500 would likewise suggest further gains. The Trend Index trough above zero indicates strong buying pressure.
The trouble with an accelerating up-trend (or blowoff as they are often called) is that they seldom give you adequate warning of a reversal. The All Ordinaries Gold Index retreated this week and is testing its rising trendline at 8000. Breach of 8000 seems unlikely but would warn of a correction.
We maintain our bullish outlook for Gold, with a target of the 2012 high at $1800/ounce.
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.