Gold, Treasuries and China’s Yuan

China’s Yuan retreated against the Dollar, encountering resistance at 14.35 US cents as the seemingly endless trade talks hit another rough patch. Breach of recent support 14.15 would warn of another test of primary support at 14 cents.

Chinese Yuan CNY/USD

Chinese purchases have weakened 10-Year Treasury yields in the last two weeks. A Yuan at 14 cents is likely to result in 10-year yields testing support at 1.50%. The disconnect between long-term and short-term rates in the US is growing, with long-term rates increasingly dictated by actions at the PBOC.

10-Year Treasury Yields

Declining yields strengthen demand for Gold as it lowers the opportunity cost. Expect continued support at $1450/ounce and a possible test of the descending trendline at $1500. Breach of support is unlikely unless Treasury yields again test resistance at 2.0%.

Gold (USD/ounce)

Silver is similarly testing support at $17.00/ounce but we are unlikely to see a follow-through unless Treasury yields strengthen.

Silver (USD/ounce)

Australia’s All Ordinaries Gold Index continues in a downward trend channel, headed for secondary support at 6000. Declining Trend Index peaks warn of strong selling pressure. Respect of 6000 would signal that the primary up-trend is intact, while breach and a test of primary support at 5400 would warn of trend weakness.

All Ordinaries Gold Index

Patience

Gold remains in a long-term up-trend. A correction may offer an attractive entry point but we first need to confirm that the up-trend is intact before increasing exposure to gold stocks.

Falling Yuan bullish for Gold

China’s Yuan continued its plunge against the US Dollar after the latest Trump tariff tantrum. The trade war is hotting up and we can expect further Yuan weakness, fueling demand for Gold.

CNYUSD

Spot Gold consolidation above $1500/ounce is a bullish sign, while a Trend Index trough above zero indicates strong buying pressure.

Spot Gold in USD

We maintain our bullish outlook for Gold, with a target of the 2012 high at $1800/ounce.

The All Ordinaries Gold Index surprised with a fall despite the weakening Aussie Dollar. Penetration of the rising trendline warns of a correction but the primary trend remains upward. A Trend Index trough that respects the zero line would confirm this.

All Ordinaries Gold Index

Gold pauses after recent surge

China’s Yuan has paused after breaking above 7.0 to the US Dollar. Expect further consolidation, but respect of support at 7.0 would signal a further advance (and Yuan weakness), fueling demand for Gold.

USDCNY

Spot Gold is consolidating above $1500/ounce. Respect of support at $1500 would likewise suggest further gains. The Trend Index trough above zero indicates strong buying pressure.

Spot Gold in USD

The trouble with an accelerating up-trend (or blowoff as they are often called) is that they seldom give you adequate warning of a reversal. The All Ordinaries Gold Index retreated this week and is testing its rising trendline at 8000. Breach of 8000 seems unlikely but would warn of a correction.

All Ordinaries Gold Index

We maintain our bullish outlook for Gold, with a target of the 2012 high at $1800/ounce.