10-Year Treasury yields are headed for another test of 2.0%. Rising Trend Index peaks indicate buying pressure. Breakout would offer a target of 2.50% and further weaken demand for Gold (higher yields increase the opportunity cost of holding precious metals).
Gold continues to test support at $1450, while lower Trend Index peaks warn of selling pressure. Breach of support would offer a target of $1350/ounce.
Silver made a false break through support at $16.80/ounce but the overall pattern, with declining Trend Index peaks, remains bearish.
Australia
Australia’s All Ordinaries Gold Index continues in a downward trend channel. Declining Trend Index peaks warn of continued selling pressure but seem to be leveling off. Respect of support at 6000, accompanied by higher Trend Index troughs, would suggest that a base is forming. Breakout from the trend channel would strengthen the signal.
Patience
Gold is in a long-term up-trend and the current correction may offer an attractive entry point. But we first need a breakout from the trend channel to confirm that the up-trend is intact.
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.