Category: Gold & Precious Metals

Gold and Precious Metals

Posted on

Gold finds support at $1200

Spot gold recovered above the former primary support level at $1200/ounce despite low inflation and the stronger Dollar. I would attribute demand to rising uncertainty in the global economy, with falling oil prices, political turmoil in the Middle East and Eastern Europe, and the potential for a currency war with competing currency debasement (QE) between Japan, China and the EU.

Spot Gold

Bullish divergence on 13-week Twiggs Momentum suggests a recovery. Breakout above $1250 would indicate a rally to $1400. But reversal below $1200 remains as likely and would warn of a decline to $1000. Respect of the TMO zero line (from below) would strengthen the bear signal.

Posted on

Gold and Inflation

The Dollar Index is testing long-term highs at 90. Breakout is likely and would suggest a strong bull trend.

Dollar Index

One reason is falling inflation expectations, with the Breakeven Rate (5-year Treasury yield minus equivalent TIPS yield) testing its 5-year low. Further falls would increase pressure on the Fed to raise interest rates.

Breakeven Rate

A strong Dollar and low inflation both weaken gold prices. Declining 13-week Twiggs Momentum, below zero, suggests a strong down-trend. Follow-through below $1180/ounce would confirm this.

ASX 200 daily

Posted on

Stronger dollar, weaker gold

Ten-year Treasury Note yields retreated below 2.30%, signaling another test of primary support at 2.00%. Declining 13-week Twiggs Momentum below zero suggests a continuing down-trend. Recovery above 2.40% is unlikely, but would warn of a rally to 2.65%.

10-Year Treasury Yields

* Target calculation: 2.30 – ( 2.60 – 2.30 ) = 2.00

The Dollar Index is testing resistance at its 2008/2010 highs between 88 and 90. Rising 13-week Twiggs Momentum indicates a healthy (primary) up-trend. Expect retracement or consolidation below resistance, but failure of support at 84 is unlikely.

Dollar Index

* Target calculation: 84 + ( 84 – 79 ) = 89.00

Gold

Low inflation and a strong dollar reduce demand for gold. Low interest rates reduce the carrying cost of gold, but the appeal is muted when inflation expectations remain low. Gold is testing its new resistance level at $1200/ounce. Respect is likely and would confirm a long-term target of $1000*. Declining 13-week Twiggs Momentum below zero indicates a strong down-trend.

Spot Gold

* Target calculation: 1200 – ( 1400 – 1200 ) = 1000

Posted on

Gold breaks key support level

A monthly chart of Gold shows the breach of support at $1200/ounce, offering a long-term target of $1000*. Another 13-week Twiggs Momentum peak below zero strengthens the signal. Retracement that respects the new resistance level at $1200 would confirm. Recovery above 1200 is unlikely.

Spot Gold

* Target calculation: 1200 – ( 1400 – 1200 ) = 1000

Crude Oil

Crude is also falling — in response to the rising Dollar as well as expanding supply. The long-term target for Brent crude is $60*.

Brent Crude

* Target calculation: 90 – ( 120 – 90 ) = 60

…And $50/barrel for Nymex Light Crude. Follow-through below $75 would confirm the down-trend.

Nymex Crude

* Target calculation: 80 – ( 110 – 80 ) = 50

Commodities

Copper is below its 2011 low of $6800/tonne, reflecting weak demand from China. Follow-through below $6600 would confirm a primary down-trend.

Copper

Dow Jones UBS Commodity Index has already broken support at 125, suggesting a test of its 2009 low at 100.

Dow Jones UBS Commodity Index

Posted on

Gold – further falls likely

Low interest rates increase demand for gold by lowering the carrying cost. A rising dollar, however, has the opposite effect.

Gold respected resistance at $1250/ounce, confirming the primary down-trend. Another 13-week Twiggs Momentum peak below zero strengthens the signal. Breach of primary support at $1180 would offer a long-term target of $1000*. Recovery above 1250 is unlikely, but would test the descending trendline around $1300.

Spot Gold

* Target calculation: 1200 – ( 1400 – 1200 ) = 1000

Gold Bugs Index, representing un-hedged gold stocks, fell sharply since breaching long-term support at 190. Declining 13-week Twiggs Momentum (below zero) signals a strong primary decline. Bearish for gold.

Gold Bugs Index

The price of gold adjusted for inflation (gold/CPI) remains relatively high and further falls are likely.

Gold adjusted for CPI

Posted on

Gold Bugs and Silver warn of further weakness

Low interest rates strengthen demand for gold as they reduce the carrying cost. A rising dollar, however, would reduce demand.

Gold encountered stubborn resistance at $1250/ounce. Respect would confirm the primary down-trend. Another 13-week Twiggs Momentum peak below zero would strengthen the signal. Breach of primary support at $1180 would offer a long-term target of $1000*. Recovery above $1250 is unlikely, but would test the descending trendline around $1300.

Spot Gold

* Target calculation: 1200 – ( 1400 – 1200 ) = 1000

Gold Bugs Index, representing un-hedged gold stocks, broke long-term support at 190, signaling another primary decline. Gold is likely to follow.

Gold Bugs Index

Silver failed to rally in concert with gold, instead consolidating in a narrow range which suggests further weakness. Another bearish sign for gold.

Silver

Posted on

Bears eye gold

Gold is testing resistance at $1250/ounce after a two-week retracement. 13-Week Twiggs Momentum (below zero) continues to indicate a primary down-trend. Respect of resistance at $1250 would confirm this. And breach of primary support at $1180 would offer a long-term target of $1000*.

Spot Gold

* Target calculation: 1200 – ( 1400 – 1200 ) = 1000

Silver has already broken long-term support, signaling another primary decline. Gold is likely to follow.

Gold Bugs Index, representing un-hedged gold stocks, is also testing long-term support (at 190). Breach of support would strengthen the bear signal for gold.

Gold Bugs Index

Posted on

Gold finds support

Gold rallied off support at $1180 and is likely to test $1250/ounce. But the primary trend, as indicated by 13-week Twiggs Momentum (below zero), remains down. Respect of resistance at $1250 would confirm this. Breach of primary support at $1180 would offer a long-term target of $1000*.

Spot Gold

* Target calculation: 1200 – ( 1400 – 1200 ) = 1000

Silver is also in a primary down-trend, retracing to test the new resistance level at $18.50/$19.00 per ounce. Respect would confirm the target of $15.50/ounce*.

Spot Silver

* Target calculation: 18.5 – ( 21.5 – 18.5 ) = 15.5

Posted on

It’s Time To Drive Russia Bankrupt — Again

Interesting view from Louis Woodhill on Forbes:

Over the past 64 years, real gold prices have averaged $544.91/oz in 4Q2013 dollars, and real crude oil prices have averaged $38.85 bbl. This means that an ounce of gold will typically buy about 14 barrels of oil.

If we fully stabilized the dollar today, we could expect gold prices to fall toward $550/oz, and oil prices to fall toward $40.00/bbl. The huge dollar premiums that gold and oil currently command reflect the value that these easy-to-store commodities have as hedges against dollar instability. If we reformed our monetary control system to guarantee the real value of the dollar, we would eliminate this risk. The risk premiums currently enjoyed by oil and gold would then decline toward zero, as the new monetary system gained credibility.

Are the current gold and oil premiums simply a hedge against an unstable dollar?

Read more at It's Time To Drive Russia Bankrupt — Again.

Posted on

Gold threatens four-year low

Gold & Silver

Silver broke long-term support at $18.50 per ounce, offering a target of $15.50/ounce*. First, expect retracement to respect the new resistance level. Gold is likely to follow Silver to a new four-year low.

Spot Silver

* Target calculation: 18.5 – ( 21.5 – 18.5 ) = 15.5

Gold respected the new resistance level at $1240/ounce and is now testing $1200. Follow-through below $1180 would offer a long-term target of $1000*, while respect would suggest another rally to $1240. Declining 13-week Twiggs Momentum, below zero, further strengthens the bear signal.

Spot Gold

* Target calculation: 1200 – ( 1400 – 1200 ) = 1000

Gold Bugs Index (representing un-hedged gold stocks) is also testing long-term support. Breach of support at 200 would strengthen the bear signal for Gold.

Gold Bugs Index

Interest Rates and the Dollar

Rising Treasury yields and a stronger Dollar both add downward pressure to Gold. Higher interest rates increase the carrying cost of gold, while the Dollar competes with Gold both as a safe haven and as an appreciating asset (against other currencies).

The Dollar Index broke through resistance at the 2013 high of 84.75. Rising 13-week Twiggs Momentum, above zero, signals a primary up-trend. Expect retracement to test the new support level. Respect is likely and would offer a long-term target of 89*. Reversal below 84.50 is unlikely, but would warn of a correction.

Dollar Index

* Target calculation: 84 + ( 84 – 79 ) = 89.00

The yield on ten-year Treasury Notes respected resistance at 2.65 percent and is retracing to test support at 2.50. Follow-through above 2.70 would signal an advance to 3.00, but 13-week Twiggs Momentum below zero continues to suggest a primary down-trend. Failure of support at 2.50 would indicate another test of primary support at 2.30.

10-Year Treasury Yields

* Target calculation: 2.30 – ( 2.60 – 2.30 ) = 2.00

Powered by WordPress / WordPress Maintenance Service By Website Helper