Category: Gold & Commodities

The Dollar Index is consolidating on the weekly chart, indicating uncertainty. Respect of resistance at 80.00 would warn of another test of support at 78.00, while breakout would indicate continuation of the primary up-trend. In the longer term, breakout above 82.00 would offer a target of 86.00*, while failure of support at 78.00 would signal a primary down-trend. Reversal of 63-day Twiggs Momentum below zero would also warn of a primary down-trend.

* Target calculation: 82 + ( 82 – 78 ) = 86

Gold remains undecided despite a sharp fall on the Gold Bugs Index. The long tail on last week’s candle for spot gold indicates buying pressure at the $1600 support level. Recovery above $1700 would respect the long-term trendline and indicate another test of $1800, suggesting the start of a new up-trend. Breakout above $1800 would confirm, offering a target of $2000/ounce*. A 63-day Twiggs Momentum trough predominantly above the zero line would strengthen the bull signal. Reversal below support at $1600, however, would warn of a primary down-trend — confirmed if support at $1500 is broken.

* Target calculation: 1800 + ( 1800 – 1600 ) = 2000

The Gold Bugs Index, representing un-hedged gold stocks, is in a clear primary down-trend since breaking support at 500. Peaks below zero on 63-day Twiggs Momentum also signal a strong down-trend.

The Dollar Index is retracing to test primary support at 78.00 on the weekly chart. Respect of the rising trendline would signal continuation of the primary up-trend, while failure of support would warn of a down-trend to test support at 73.00. Reversal of 63-day Twiggs Momentum below zero would strengthen the bear warning.

* Target calculation: 82 + ( 82 – 78 ) = 86

Despite the weakening dollar, spot gold is headed for the long-term rising trendline on the weekly chart. Failure of support at $1600/ounce would warn that the primary trend is weakening, while failure of $1500 would signal that the trend has reversed. Reversal of 63-day Twiggs Momentum into negative territory — for the second time recently after several years above zero — already warns of a primary down-trend.

* Target calculation: 1500 – ( 1800 – 1500 ) = 1200

The 4-hour chart shows gold respecting resistance at $1700 before retreating below medium-term support at $1670. Failure of short-term support at $1655 (the 0.618 Fibonacci retracement level) would test $1630 and signal continuation of the down-trend. Recovery above $1700 is unlikely but would signal respect of the long-term rising trendline (on the weekly chart above) and resumption of the primary up-trend.

Spot gold found short-term support at $1640/ounce but is likely to continue its correction to test primary support at $1500. Reversal of 63-day Twiggs Momentum below zero, for the second time, threatens an iceberg top which would signal a primary down-trend. Breach of primary support at $1500 remains unlikely, but would signal a decline to $1200*.

* Target calculation: 1700 – ( 1800 – 1700 ) = 1600; 1500 – ( 1800 – 1500 ) = 1200

The US Dollar continues in a primary up-trend, the Weekly chart showing the Dollar Index headed for another test of support at 78.00. Failure would warn that the trend is weakening, while respect would signal another attempt at 82.00

* Target calculation: 82 + ( 82 – 78 ) = 86