Category: Gold & Precious Metals

Gold and Precious Metals

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Gold: Further weakness likely

US Treasury yields are rising, with the 10-year yield breaking through 1.80 percent to signal a test of 2.0 percent. Further rises are likely on the back of stronger GDP figures for the last quarter.

10-year Treasury Yields

The Chinese Yuan continues to depreciate against the Dollar in anticipation of another rate rise from the Fed.

USDCNY

Spot gold displays a weak retracement off support at $1250/ounce, with short candles indicating a lack of conviction. Another primary decline is likely and would test primary support at $1200.

Spot Gold

The ASX All Ordinaries Gold Index respected the descending trendline, suggesting another decline. Reversal below 4300 would confirm, offering a target of 4000.

All Ordinaries Gold Index

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Gold selling pressure continues

Selling pressure on gold continues, with the SPDR Gold [GLD] ETF consolidating in a bearish narrow band above support at 119. Twiggs Money Flow below zero warns of long-term selling pressure. Continuation of the down-trend is likely and breach of 119 would signal another decline.

SPDR Gold

Spot gold displays a similar narrow consolidation at $1250/ounce. Continuation is likely and would test primary support at $1200.

Spot Gold

The ASX All Ordinaries Gold Index recovered above resistance at 4500 but has so far respected the descending trendline. Respect is likely and reversal below 4300 would signal a decline to 4000.

All Ordinaries Gold Index

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Gold: The importance of $1200/ounce

Interest rates are rising, driving gold lower. Long-term Treasury yields are heading for a test of resistance at 2.0 percent but a lot depends on continued stability in financial markets.

10-Year Treasury Yields

The Chinese Yuan continues its devaluation against the Dollar. Any sharp movements would spur global instability and increase demand for gold. But at present Dollar appreciation proceeds at a measured pace.

USDCNY

Selling pressure on gold has increased, reflected by the steep fall of Twiggs Money Flow on the SPDR Gold [GLD] ETF. A larger (TMF) peak near zero would warn of a long-term sell-off.

SPDR Gold

Spot gold has paused in its descent, with a short candle on the weekly chart reflecting short-term support at $1250/ounce, but expect a test of primary support at $1200.

Spot Gold

A long-term monthly chart of gold reflects the importance of support at $1200. The high of 2009, the lows of 2013, and the recent lows in April and June, all reinforce strength at $1200. Breach of this level would signal a long-term down-trend.

Spot Gold

The ASX All Ordinaries Gold Index retraced to test resistance at 4500 after the recent breakout. Respect is likely and would signal decline to 4000.

All Ordinaries Gold Index

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Gold: Brief pause at $1250

At present, interest rates are driving gold. How long this will continue is hard to say. It depends on what shocks lie in store for the global financial system. Two pending rolls of the dice are the November 8 elections and negotiations over Britain’s exit from the EU.

Long-term Treasury yields are rising while gold is falling. Expectations of a rate rise after the November election are growing and a test of resistance at 2.0 percent is likely. But a lot depends on continued stability of financial markets.

10-Year Treasury Yields

Spot gold reacted to rising interest rates by breaking support at $1300/ounce, warning of a test of primary support at $1200. A brief pause at medium-term support at $1250 is indicated by a spinning top candlestick, signaling indecision. Support at $1250 is unlikely to hold but the primary up-trend is intact unless support at $1200 is broken.

Spot Gold

The ASX All Ordinaries Gold Index broke support at 4500, warning of a primary down-trend. The immediate target is 4000.

All Ordinaries Gold Index

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Gold breaches $1300/ounce

Spot gold broke support at $1300/ounce warning of a test of primary support at $1200. The up-trend has lost momentum, reflected by penetration of the rising trendline, but consolidation above $1200 would suggest that the trend is intact. Breach of $1200 is now as likely, however, and would warn of a test of the 2015 low at $1050/ounce.

Spot Gold

The ASX All Ordinaries Gold Index is testing support at 4500. Breach is likely and would warn of a primary down-trend.

All Ordinaries Gold Index

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Gold loses direction

Inflationary pressures are low, Yuan depreciation is gradual, Europe looks like it will ‘muddle through’ on Brexit and Hillary Clinton is favorite to win the November election. No sudden shocks to spark a rally in Gold, with the spot metal consolidating in a narrow range above $1300/ounce. But life is like a box of chocolates. You never know what you’re gonna get. (Forrest Gump – 1994).

Spot Gold

* Target calculation: 1375 + ( 1375 – 1300 ) = 1450

Short retracement indicates that support at $1300/ounce is strong. Breakout above $1350 would signal a fresh advance, with a target of $1450*. Breach of support is less likely but would warn of a test of primary support at $1200/ounce.

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Gold respects support

10-Year Treasury yields are retracing to test the recent support level at 1.60 percent but the trend remains upward.

10-Year Treasury Yields

The Chinese Yuan is easing against the US Dollar, with USDCNY in a gradual up-trend as the PBOC manages the decline in order to conserve foreign reserves. This is likely to alleviate immediate selling pressure on the Yuan, both from capital flight and borrowers covering on Dollar-denominated loans.

USDCNY

Spot gold respected support at $1300/ounce. Breakout above the falling wedge (and resistance at $1350) would signal another advance.

Spot Gold

* Target calculation: 1375 + ( 1375 – 1300 ) = 1450

Rising interest rates and low inflation are bearish for gold but uncertainty over US elections, Europe/Brexit, and the path of the Chinese economy contribute to bullish sentiment.

Gold stocks serve as a useful counter-balance to growth stocks in a portfolio. If there are positive outcomes and a return to economic stability, growth stocks will do well and gold is likely to underperform. If there is instability and growth stocks do poorly, gold stocks are likely to outperform.

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Gold approaches a watershed

Expectations of interest rate rises are growing, with 10-year Treasury yields advancing towards 2.0 percent after breaking out above 1.60.

10-Year Treasury Yields

The Chinese Yuan is easing against the US Dollar, in a managed process from the PBOC which will use up foreign reserves more slowly than a direct peg. It is also likely to minimize selling pressure on the Yuan, both from capital flight and from Chinese borrowers covering on Dollar-denominated loans.

USDCNY

Spot gold is easing, in a falling wedge formation, towards a test of medium-term support at $1300/ounce. This is a watershed moment. Breach of $1300 would warn of a test of primary support at $1200. But respect of support would suggest another test of the July high at $1375.

Spot Gold

* Target calculation: 1375 + ( 1375 – 1300 ) = 1450

Rising interest rates and low inflation increase downward pressure on gold but uncertainty over US elections, Europe/Brexit, and the path of the Chinese economy contribute to buying support. Gold stocks serve as a useful counter-balance to growth stocks in a portfolio. If there are positive outcomes and a return to economic stability, then growth stocks will do well and gold is likely to underperform. If things goes wrong and growth stocks do poorly, gold stocks are likely to outperform.

In Australia the All Ordinaries Gold Index ($XGD) continues to test support at 4500. Respect (recovery above 5000) would signal another test of the recent highs at 5600. A weakening Australian Dollar/US Dollar would tend to mitigate the impact of a fed rate hike. Breach of 4500 is less likely but would confirm a primary down-trend.

All Ordinaries Gold Index $XGD

* Target calculation: 4500 – ( 5000 – 4500 ) = 4000

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Gold finds support

Spot Gold found support at $1325/ounce after retracing from resistance at $1350. Short candles suggest weak selling pressure. Respect of support at $1325 would signal another test of the July high at $1375. Follow-through above $1350 would confirm. Breakout above $1375 would offer a target of $1450* but expect strong resistance if the Fed appears intent on raising interest rates. Breach of support at $1300 is unlikely but would warn of a test of primary support at $1200/ounce.

Spot Gold

* Target calculation: 1375 + ( 1375 – 1300 ) = 1450

In Australia the All Ordinaries Gold Index ($XGD) is testing support at 4500. Respect is likely and would signal a test of the recent highs around 5600. A weakening Australian Dollar/US Dollar would tend to mitigate the impact of a fed rate hike. Breach of 4500 is unlikely but would warn of trend reversal.

All Ordinaries Gold Index $XGD

* Target calculation: 5500 + ( 5500 – 4500 ) = 6500

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Gold rallies

Spot Gold rallied to test resistance at $1350/ounce. Momentum above zero continues to indicate a primary up-trend. Short retracement (short candles and short duration) would signal a test of the July 2016 high at $1375. Breakout above $1375 would offer a target of $1450*. Breach of support at $1300 is unlikely but would warn of a test of primary support at $1200/ounce.

Spot Gold

* Target calculation: 1375 + ( 1375 – 1300 ) = 1450

In Australia the All Ordinaries Gold Index ($XGD) found support at 4500. Expect a test of the recent highs around 5500. The Index is likely to follow the spot gold price, provided the Australian Dollar/US Dollar remains fairly stable. Breakout above 5500 would signal a fresh advance, with a target of 6500*. Breach of 4500 is unlikely but would warn of trend reversal.

All Ordinaries Gold Index $XGD

* Target calculation: 5500 + ( 5500 – 4500 ) = 6500

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