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
The US Dollar Index broke resistance at 81.80, signaling the start of a primary advance to 86.00*. The 63-day Twiggs Momentum trough above zero indicates a strong up-trend. Expect retracement to test the new support level at 81.50/81.80. Respect would confirm the bull signal.
* Target calculation: 82 + ( 82 – 78 ) = 86
Spot Gold is testing the band of support between $1500 and $1550/ounce. Wednesday’s long tail is evidence of buying support, but declining 63-day Twiggs Momentum (below zero) warns of a primary down-trend. Another rally that respects resistance at $1600 would strengthen the bear signal. Breakout below $1500 would confirm, offering a target of $1200*. Recovery above $1600, while unlikely, would suggest another test of $1800.
* Target calculation: 1500 – ( 1800 – 1500 ) = 1200
The Dollar Index continues to struggle with resistance at 80. Reversal below 78 would signal the end of the primary up-trend and a re-test of the 2011 low. Reversal of 63-day Twiggs Momentum below zero would strengthen the warning, while respect would indicate another primary advance.
* Target calculation: 82 + ( 82 – 78 ) = 86
Spot Gold failed to respond to the listless dollar, testing the long-term trendline and support at $1600/ounce. 63-Day Twiggs Momentum oscillating around the zero line indicates indecision. Recovery above $1700 would indicate a fresh primary advance, while failure of $1600 would warn of a primary down-trend — with a long-term target of $1200*.
* Target calculation: 1800 + ( 1800 – 1600 ) = 2000; 1500 – ( 1800 – 1500 ) = 1200
The Dollar Index met strong resistance at 80.00 and is likely to re-test support at 78.00. Upward breakout would signal continuation of the primary up-trend, while failure of support would warn of reversal to a down-trend. In the longer term, breakout above 82.00 would offer a target of 86.00*. Respect of the zero line by 63-day Twiggs Momentum would reinforce the primary up-trend, while breach would indicate a primary down-trend.
* Target calculation: 82 + ( 82 – 78 ) = 86
Gold continues to test the long-term trendline at $1600/ounce. 63-Day Twiggs Momentum oscillating around the zero line highlights uncertainty. Failure of support at $1600 would warn that the decade-long up-trend is weakening, while breach of primary support at $1500 would confirm. Recovery above $1700, however, would indicate another test of $1800, suggesting the start of a new up-trend. Breakout above $1800 would confirm, offering a target of $2000/ounce*.
* Target calculation: 1800 + ( 1800 – 1600 ) = 2000; 1500 – (1800 – 1500 ) = 1200
The Gold Bugs Index, representing un-hedged gold stocks, is already in a primary down-trend, suggesting that spot prices are likely to follow. Peaks below zero on 63-day Twiggs Momentum also indicate a strong down-trend.
Spot silver is also in a primary down-trend, having encountered strong resistance at $36/ounce. A medium-term descending triangle warns of further weakness. Failure of primary support at $26 would indicate a decline to $20*.
* Target calculation: 27.50 – (35 – 27.50 ) = 20
Spot gold is headed for a test of resistance at $1800 after breaching the descending trendline on the weekly chart, indicating that a bottom is forming. Breakout above $1800 would complete a double bottom reversal, with a target of $2100*. Respect of $1800 remains as likely, however, and would indicate another test of primary support at $1500.
* Target calculation: 1800 + ( 1800 – 1500 ) = 2100
The Dollar Index is weakening in anticipation of QE3 ahead of the November 2012 elections. The primary trend remains upward, though breach of the rising trendline, and/or reversal of 63-day Twiggs Momentum below zero, would warn that a top is forming.
* Target calculation: 80 + ( 80 – 75 ) = 85
The US Dollar Index has retraced to test medium-term support at 79.50. Respect would confirm a strong primary up-trend, while failure would suggest trend weakness. 63-Day Twiggs Momentum above zero still indicates a primary up-trend, but breach of the rising trendline warns that the up-trend is slowing. A weakening dollar is likely to cause stronger commodity prices.
* Target calculation: 80 + ( 80 – 75 ) = 85
The weekly chart shows spot gold testing its descending trendline. Respect would indicate another test of primary support at $1500/ounce, while breakout would suggest that a bottom is forming. Reversal of 63-day Twiggs Momentum below zero would complete an iceberg pattern, warning of a primary down-trend. The bull-trend of the last few years was driven by quantitative easing (QE1 and QE2) from the Fed. We are unlikely to see another bull-trend without QE3.
* Target calculation: 1600 – ( 1800 – 1600 ) = 1400
Copper broke through resistance at $8000/tonne, completing a higher trough and signaling a primary up-trend. Recovery of 63-day Twiggs Momentum above zero would strengthen the signal. The primary up-trend in this bellwether commodity suggests an economic recovery is under way.
* Target calculation: 8000 + ( 8000 – 7200 ) = 8800
The broader CRB Commodities Index, however, lags behind. Breach of the descending trendline indicates a base is forming, but only recovery above 325 would signal a primary up-trend. Cross-over of 63-day Twiggs Momentum above zero would strengthen the bull signal.
Brent crude is also forming a base, after breaching its descending trendline. Breakout above 115 would signal the start of a primary up-trend.
* Target calculation: 115 + ( 115 – 105 ) = 125
The US Dollar Index retraced to test support at 79.50/80.00. Respect would confirm the primary up-trend, signaling an advance to 85.00*.
* Target calculation: 80 + ( 80 – 75 ) = 85
Spot Gold is testing resistance at $1700 and the descending trendline. Breakout would indicate that the down-trend has ended and the metal is forming a base.
Commodities also appear to be forming a base, with the CRB Commodities Index testing resistance at 315 after piercing the descending trendline. Recovery above 325 would complete a double-bottom reversal. Recovery of 63-day Twiggs Momentum above the zero line would also be a bullish sign.
The Dollar Index continues in a primary up-trend after twice successfully testing support at 79.50/80.00. Target for the advance is 85.00*.
* Target calculation: 80 + ( 80 – 75 ) = 85
The Dollar Index broke through resistance at 80.00, signaling a primary advance to 85.00. Rising 63-day Twiggs Momentum indicates a strong up-trend.
* Target calculation: 80 + ( 80 – 75 ) = 85
The stronger dollar caused spot gold to weaken, testing the band of support between $1550 and $1600/ounce.
Gold is also testing the lower trend channel on the weekly chart. Cross of 63-day Twiggs Momentum below zero warns of a trend reversal. Failure of support at $1550 would confirm a primary down-trend.
* Target calculation: 1600 – ( 1800 – 1600 ) = 1400
CRB Commodities Index is similarly testing support at 292. Breakout would offer a target of 265*.
* Target calculation: 295 – ( 325 – 295 ) = 265
Brent Crude is testing medium-term support at $105/barrel. Failure would indicate a test of the lower trend channel.
Some readers questioned why gold and stocks are falling simultaneously — one normally rises when the other falls. A possible explanation is that expectation of quantitative easing, both from the Fed and ECB, has been supporting both markets. As prospects of QE recede, inflation forecasts will be lowered and demand for inflation-hedge assets (stocks and commodities) will fade. We should see a corresponding rise in bond prices (and falling yields) as a result.
