Spot gold rallied late Friday, breaking the first line of resistance at $1600/ounce. Penetration of the declining trendline suggests that the down-trend is weakening, but 63-day Twiggs Momentum remains firmly below zero. Retracement that respects new support at $1600 would strengthen the bull signal, however, as would recovery of Momentum above zero.
* Target calculation: 1500 – ( 1800 – 1500 ) = 1200
The Dollar Index followed through after last week’s breakout above resistance at 81.50/82.00, confirming the fresh advance signaled by a 63-day Twiggs Momentum trough above zero. Target for the advance is 86.00*.
* Target calculation: 82 + ( 82 – 78 ) = 86
On the daily chart, spot gold tests medium-term support at $1530/ounce. Long tails indicate buying support but the rising dollar continues to apply downward pressure. Breach of support and follow-through below $1500 would signal a long-term decline to $1200/ounce*. Declining 63-day Twiggs Momentum (below zero) already indicates a primary down-trend. Recovery above $1600 is less likely but would indicate that the down-trend is weakening.
* Target calculation: 1500 – ( 1800 – 1500 ) = 1200
Amex Gold Bugs Index, representing un-hedged gold stocks, followed through below 480, after breaking primary support at 500, confirming a primary down-trend. Peaks below the zero line on 63-day Twiggs Momentum also signal a primary down-trend. The Gold Bugs index often acts as a leading indicator of trend changes in spot gold prices. Expect further weakness in the yellow metal; breach of support at $1500/ounce would confirm a primary down-trend.
Spot gold is testing support at $1700/ounce after its recent breakout above the descending trendline and resistance (at $1700). Respect of support would indicate a primary advance to $1900. In the long term, breakout above $1900 would offer a target of $2200, while failure of support at $1600 would warn of a primary down-trend.
* Target calculation: 1900 + ( 1900 – 1600 ) = 2200
Amex Gold Bugs Index is headed for another test of the upper border of its right-angled broadening wedge formation. The pattern is bearish and breakout below 500 would warn of a primary reversal for spot gold.
Spot gold is headed for a test of support at $1600/ounce; failure would offer a target of $1500*. In the long term, the primary trend remains up and breakout above $1700 would signal an advance to $1900.
* Target calculation: 1700 – ( 1900 – 1700 ) = 1500
Amex Gold Bugs index ($HUI) is headed for a test of primary support at 500 on the weekly chart. Failure would signal a primary down-trend with an initial target of 400* — and warn of a similar reversal for spot gold. Declining 63-day Twiggs Momentum slipped below zero to strengthen the bear signal.
* Target calculation: 500 – ( 600 – 500 ) = 400
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.
Amex Gold Bugs Index gapped through the rising trendline and support at 600, warning of a bull trap. The Gold Bugs Index represents unhedged gold miners. Spot gold support at $1700/ounce is now likely to fail.
