Amex Gold Bugs Index continues in a broadening wedge formation. Downward breakouts occur 66% of the time, according to Thomas Bulkowski. Failure of support at 500 would offer a target of 370*.
* Target calculation: 500 – ( 630 – 500 ) = 370
Dollar retreats, gold rises
The US Dollar Index is retracing to test support at 76.00. Respect of support would confirm the primary up-trend and offer a target of 84.00* for the next advance. A 63-day Twiggs Momentum trough above zero would strengthen the signal.
* Target calculation: 80 + ( 80 – 76 ) = 84
Spot gold is testing the declining trendline and resistance at $1700/ounce. Respect would warn of a decline to test $1500*. The primary trend remains upward and will resume if the Fed introduces further quantitative easing in the months ahead.
* Target calculation: 1700 – ( 1900 – 1700 ) = 1500
Dollar fall lifts gold
The US Dollar Index broke out of its trend channel, warning of a correction back to 76 on the daily chart. Respect of 76 — or 63-day Twiggs Momentum respect of the zero line — would confirm the primary up-trend and offer a target of 84*.
* Target calculation: 80 + ( 80 – 76 ) = 84
Spot gold rallied as the dollar weakened and is testing its descending trendline and resistance at $1700/ounce. Respect would signal a decline to $1500*, while upward breakout would indicate that the correction has weakened but not necessarily ended.
* Target calculation: 1700 – ( 1900 – 1700 ) = 1500
Crude breaks support
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Brent crude broke support at $104/barrel and is testing the lower trend channel and long-term rising trendline. Respect would signal a rally to the upper channel border, while breakout below the rising trendline would warn of a sharp fall. 63-Day Momentum below zero suggests the down-trend is strengthening.
* Target calculation: 105 – ( 115 – 105 ) = 95
Commodities down-trend accelerates
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CRB Commodities index broke out below its trend channel and is now retracing to test the new resistance level. Respect of resistance at 300 would confirm the breakout and warn of an accelerating down-trend. The 63-day Momentum peak below zero indicates a strong primary down-trend.
Spot gold correction tests $1600
Spot gold is testing support at $1600/ounce, but the primary trend remains upward. Expect a rally to the declining trendline. Breakout above $1700 would indicate the correction is weakening, while failure of support would test $1500*.
* Target calculation: 1700 – ( 1900 – 1700 ) = 1500
Amex Gold Bugs Index, representing un-hedged gold stocks, is testing primary support at 500. Failure of support would warn of a reversal in the primary trend and would be a bearish sign for spot metal prices.
Gold and crude suffer from strong dollar
Spot Gold is testing support at its initial target of $1600/ounce. The long tail is evidence of buying support, but failure would test $1500. The primary trend direction remains up and, despite gold experiencing a strong correction, is unlikely to change.
* Target calculation: 1750 – ( 1900 – 1750 ) = 1600
Brent crude is testing support at $104/barrel while Nymex WTI crude is at $80/barrel. There is no sign of the divergence between the two grades closing. Both have signaled a primary down-trend, though Brent has yet to confirm with a break of its rising trendline.
* Target calculation: 105 – ( 120 – 105 ) = 90
Commodities point to weaker Aussie and Canadian Dollar
CRB Commodities Index is testing support at 300 and the lower border of its trend channel. 63-day Twiggs Momentum holding below zero indicates a strong primary down-trend. Breakout below the trend channel would warn of a sharp decline, with a target of 260*. Respect is less likely, but would indicate a rally to test the upper trend channel.
* Target calculation: 300 – ( 340 – 300 ) = 260
Canada’s Loonie and the Aussie Dollar are both closely linked to commodity prices. A fall in the CRB index would lead to similar falls in the two currencies. CAD breakout below $0.9650 would signal a test of $0.94*.
* Target calculation: 1.00 – ( 1.06 – 1.00 ) = 0.94
Both currencies commenced a primary down-trend when they broke parity. An Aussie Dollar breakout below $0.97 would offer an identical target of $0.94*.
* Target calculation: 1.02 – ( 1.10 – 1.02 ) = 0.94
CME Raises Gold, Silver, Copper Margin Requirements – WSJ.com
Exchange operator CME Group Inc. will raise the collateral requirements for trading in gold, copper and silver futures after a volatile week.
Gold margins will be raised by 21%, silver margins by 16%, and copper margins by 18%, effective at the close of trading Monday, CME said in an email after trading closed Friday.
via CME Raises Gold, Silver, Copper Margin Requirements – WSJ.com.
Copper warns of global recession
Copper has in the past proved a reliable indicator of the state of the global economy. Now it has gapped through primary support at 8500 and below its trend channel (drawn at 2 standard deviations around a linear regression line) on the weekly chart — warning of a global recession. The 63-day Momentum peak below zero also signals a bear market.
* Target calculation: 8500 – ( 10000 – 8500 ) = 7000