The US Dollar Index $DXY_us.
Long-term interest rates close to zero after inflation, with 10-year Treasury yields testing support at 2.0%, means that the opportunity cost of holding gold is minimal.
A weakening Dollar Index is expected to test primary support at 95, further boosting demand for Gold.
Gold found short-term support at $1400 after a strong advance, indicating buying pressure. Respect of support at $1350/$1400 would offer a medium-term target of $1500/ounce.
The Dollar Index found short-term support at 96. The medium-term target is primary support at 95.
Gold retraced to test short-term support at $1400. This is a primary advance. Respect of $1350/$1400 would signal a test of the medium-term target at $1500/ounce.
The Dollar Index penetrated its rising trendline and is headed for a test of support at 95.
The falling Dollar boosted Gold. Breakout above resistance at $1350 indicates a fresh advance, with a medium-term target of $1500/ounce. Retracement that respects the new support level ($1350) would strengthen the bull signal.
10-Year Treasury yields are testing LT support at 2.00% after falling 120 basis points (bps) since late last year.
Rising global uncertainty has caused a massive outflow from equity funds into bonds.
‘Since the beginning of the year, total equity-fund outflows have tipped the scales at $155 billion, while bonds absorbed aggregate inflows of $182 billion over the same period, the largest bifurcation between the two asset classes in 15-plus years.’ https://t.co/4JpD5J6KzM pic.twitter.com/QD6E5hCkRU
— Jesse Felder (@jessefelder) June 13, 2019
The Dollar Index penetrated its rising trendline, warning of a correction to test 95.
Demand for Gold is boosted by lower bond yields and a lower Dollar. Spot Gold breakout above resistance at $1350 would signal a fresh advance, offering a medium-term target of $1500/ounce (short-term: $1400).
The latest rally in Gold reinforces my bearish outlook for equities. Gold and Treasuries are rising as investors seek a safe haven from the likely turmoil in equities.
The Dollar Index plunged below its LT rising trendline, warning of a test of 95.
Gold responded, testing resistance at $1350. Breakout above $1350 would offer a medium-term target of $1400/ounce.
Silver found short-term support at $14.50/ounce but declining Trend Index peaks indicate selling pressure and a test of primary support at $14 is likely.
Gold, by contrast, has found strong support at $1280/ounce, refusing to give way despite concerted selling. Breach of 1280 would signal a test of primary support at 1180 but recovery above 1300 becomes increasingly likely the longer that support holds.
A rising Dollar would weaken demand for Gold but the Dollar Index has met strong resistance between 97 and 98. Follow-through above 98 would signal a fresh advance but a fall below 97 would be bullish for Gold.
10-Year Treasury yields have also broken support at 2.4% offering a short-term target of 2.2%. Falling Treasury yields have a depressing effect on the Dollar and boost demand for Gold (by lowering the opportunity cost).
Gold is therefore at a watershed. Breach of strong support for Gold at $1280 would be a strong bear signal but respect would be a bullish sign, suggesting another advance. Probability is still favor of the bearish scenario but the bull case is strengthening.
China’s Yuan fell sharply against the Dollar on imposition of tariffs by the US. Expect a test of primary support.
The Dollar index strengthened. Follow-through above 98 would signal a fresh advance. The long-term target is 100.
10-Year Treasury yields are testing support at 2.40%. Breach would offer a target of 2.20%. Rate hikes are a distant memory.
Gold continues to test medium-term support at $1280/ounce. The tall shadow on this week’s candle warns of selling pressure; as does the Trend Index peak at zero. Breach of support would signal a test of primary support.
Silver continues to fall, heading for a test of primary support at $14. Declining Trend Index peaks indicate selling pressure.
Gold is likely to follow.
Silver has broken support at $15/ounce, warning of a test of primary support at $14. Declining Trend Index peaks indicate selling pressure.
Gold continues to test medium-term support at $1280/ounce. Precious metals tend to move together and Gold is expected to follow Silver in a test of primary support ($1180 for Gold).
The Dollar index, however, retreated below its new support level at 97.50. Penetration of the rising trendline would warn of a correction.
China’s Yuan fell sharply against the Dollar as trade talks encountered major turbulence. The outlook for a trade deal now looks poor.
10-Year Treasury yields are also falling as the prospect of further Fed rate hikes dims. Trend Index peaks below zero warn of strong demand for Treasuries (downward pressure on yields).
Failure to ink a trade deal is likely to boost demand for safe haven assets like the Dollar, Yen, Gold and US Treasuries. Capital flight from China may accelerate.
The Dollar index retracement respected support at 97.50, confirming the advance. Follow-through above 98.00 would further strengthen the signal. Target for the advance is 100.
10-Year Treasury yields penetrated the descending trendline, signaling that a base is forming around 2.50%. Rising troughs on the Trend Index also indicate support. Higher yields strengthen demand for Dollars.
The stronger Dollar is weakening demand for Gold. Declining Trend Index peaks warn of selling pressure. Spot Gold broke support at $1280/ounce, warning of a correction with a target of primary support at $1180.
Silver likewise broke support, at $15/ounce. Expect a test of primary support at $14.
The broad DJ-UBS Commodity Index continues to trend lower, in support of precious metals. Breach of primary support at 77 would warn of another decline.
The Dollar index broke through LT resistance at 97.50, signaling an advance to 100. Expect retracement to first test the new support level.
A stronger dollar is likely to weaken Gold. Spot Gold is testing the base of its descending triangle, at $1280/ounce. A false break, with recovery above $1280 this week, warns of strong support but the overall trend is bearish. Breach of $1280 would offer a target of primary support at $1180.
