Tag: Gold

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Dollar Index headed for 84.00

The Dollar Index is advancing strongly, headed for a test of the 2012 high at 84*. Recovery of 63-day Twiggs Momentum above zero suggests a primary up-trend. Retracement to test the new support level at 81.50 remains likely.

US Dollar Index

* Target calculation: 81.5 + ( 81.5 – 79 ) = 84

Gold has fallen as a result of dollar strength, testing primary support at $1550. Support between $1500 and $1550 remains strong, however, and we are unlikely to see a breakout below this level.

US Dollar Index

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A new Gold Standard is being born | Telegraph Blogs

Ambrose Evans-Pritchard writes:

The world is moving step by step towards a de facto Gold Standard, without any meetings of G20 leaders to announce the idea or bless the project. Some readers will already have seen the GFMS Gold Survey for 2012 which reported that central banks around the world bought more bullion last year in terms of tonnage than at any time in almost half a century. They added a net 536 tonnes in 2012 as they diversified fresh reserves away from the four fiat suspects: dollar, euro, sterling, and yen…….

It is no secret that China is buying the dips, seeking to raise the gold share of its reserves well above 2pc.

Read more at A new Gold Standard is being born – Telegraph Blogs.

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Stronger dollar, weaker commodities: gold, copper and crude

The US Dollar is in a primary up-trend, the Dollar Index having broken resistance between 81 and 82. Retracement is likely to test the new support level; respect of 81 would confirm a healthy up-trend. Respect of the zero line by 63-day Twiggs Money Flow would likewise strengthen the signal.

US Dollar Index

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

Spot gold is also testing a new support level — this time on the daily chart — after breaking 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. Follow-through above $1640 would strengthen the bull signal — as would recovery of Momentum above zero — but failure of $1600 would re-test $1540.

Spot Gold

* Target calculation: 1550 – ( 1800 – 1550 ) = 1300

Other commodities have reacted negatively to the stronger dollar, suggesting that gold will continue its downward path. Copper is in a clear down-trend, headed for a test of the 2011 low at 6800.

Copper Grade A

Brent crude broke its mid-2011 low at $100/barrel, offering a long-term target of $75*.

ICE Brent Afternoon Markers

* Target calculation: 100 – ( 125 – 100 ) = 75

Nymex WTI Light Crude is similarly headed for a test of long-term support at $75/barrel.

Nymex WTI Light Crude

CRB Commodities Index is similarly headed for a test of support at 250. The peak below zero on 63-day Twiggs Momentum warns of a strong primary down-trend. First, expect retracement to test resistance at 295; respect would confirm the down-trend.

CRB Commodities Index

* Target calculation: 290 – ( 330 – 290 ) = 250

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Gold rallies

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.

Spot Gold

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

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Spot gold tests $1530

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*.

US Dollar Index

* 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.

Spot Gold

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

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Gold suffers from strong dollar

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.

Dollar Index

* 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.

Spot Gold

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

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Kevin O'Leary: Don't buy gold stocks

Kevin O’Leary of O’Leary Funds/ ABC’s Shark Tank/ CBC’s Dragon’s Den.
Cash is king, buy dividend stocks. Buy gold, don’t buy gold stocks.

Hat tip to Kesil

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ETF Investors Go for Gold

BlackRock, the nation’s largest exchange-traded fund purveyor, said Wednesday that exchange-traded funds that invest in gold generated $4.8 billion in net new assets in November. That meant gold outperformed any other category of ETF, including fund that invest in bonds or stocks…….The rush to gold reflected increasing investor concern that gold is a safer place to put money than currencies or sovereign debt, given the European debt crisis and the high deficit and debt levels in the United States, according to Kevin Feldman, managing director for the iShares line of exchange-traded products from BlackRock.

via ETF Investors Go for Gold.

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Gold falters as the dollar strengthens

Spot Gold is headed for another test of the lower trend channel on the weekly chart. Failure of support at $1600 would warn of reversal to a primary down-trend; follow-through below the September low at $1550 would confirm. A fall of 63-day Twiggs Momentum below zero would also warn of a reversal.

Spot Gold Weekly Chart

Penetration of medium-term support at $1700 on the daily chart of spot gold is not a strong signal, but follow-through below the recent low would indicate a test of primary support at $1600. Failure would offer a target of $1400*.

Spot Gold Daily Chart

* Target calculation: 1600 – ( 1800 – 1600 ) = 1400

The NYSE Arca Gold Bugs Index has been ranging between 500 and 600 for some time. Decline of 63-day Twiggs Momentum below zero suggests long-term weakness. Reversal below primary support at 500 would signal a primary down-trend — and a negative outlook for gold.

NYSE Arca Gold Bugs Index

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Silver reverts to mean

Spot silver has reverted to its “mean” — the spot gold price plotted against weekly silver. Reaction to the GFC was far more severe than gold in 2008 as industrial demand for silver slowed. Breakout above $20/ounce in 2010, however, ignited a steep ascent to $50. The inevitable blow-off followed and silver has now reverted to its 2007 ratio to the gold price. However, Newton’s Third Law of Motion — for every action, there is an equal and opposite reaction — has an equivalent in financial markets: if price over-shoots in one direction, the reaction/correction is likely to overshoot in the opposite direction. Expect another test of primary support at $26. Failure of that level would offer a target of $16/ounce*.

Spot Silver Compared to Gold

* Target calculation: 26 – ( 36 – 26 ) = 16

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