Gold broke support at $1200/$1180 per ounce, signaling another (primary) decline. 13-Week Twiggs Momentum peaks below zero strengthens the signal. The long-term target is $1000*. Recovery above 1200 is unlikely, but would warn of a bear trap.
* Target calculation: 1200 – ( 1400 – 1200 ) = 1000
Low interest rates increase demand for gold by lowering the carrying cost. A rising dollar, however, has the opposite effect.
Gold respected resistance at $1250/ounce, confirming the primary down-trend. Another 13-week Twiggs Momentum peak below zero strengthens the signal. Breach of primary support at $1180 would offer a long-term target of $1000*. Recovery above 1250 is unlikely, but would test the descending trendline around $1300.
* Target calculation: 1200 – ( 1400 – 1200 ) = 1000
Gold Bugs Index, representing un-hedged gold stocks, fell sharply since breaching long-term support at 190. Declining 13-week Twiggs Momentum (below zero) signals a strong primary decline. Bearish for gold.
The price of gold adjusted for inflation (gold/CPI) remains relatively high and further falls are likely.
Low interest rates strengthen demand for gold as they reduce the carrying cost. A rising dollar, however, would reduce demand.
Gold encountered stubborn resistance at $1250/ounce. Respect would confirm the primary down-trend. Another 13-week Twiggs Momentum peak below zero would strengthen the signal. Breach of primary support at $1180 would offer a long-term target of $1000*. Recovery above $1250 is unlikely, but would test the descending trendline around $1300.
* Target calculation: 1200 – ( 1400 – 1200 ) = 1000
Gold Bugs Index, representing un-hedged gold stocks, broke long-term support at 190, signaling another primary decline. Gold is likely to follow.
Silver failed to rally in concert with gold, instead consolidating in a narrow range which suggests further weakness. Another bearish sign for gold.
Gold is testing resistance at $1250/ounce after a two-week retracement. 13-Week Twiggs Momentum (below zero) continues to indicate a primary down-trend. Respect of resistance at $1250 would confirm this. And breach of primary support at $1180 would offer a long-term target of $1000*.
* Target calculation: 1200 – ( 1400 – 1200 ) = 1000
Silver has already broken long-term support, signaling another primary decline. Gold is likely to follow.
Gold Bugs Index, representing un-hedged gold stocks, is also testing long-term support (at 190). Breach of support would strengthen the bear signal for gold.
Gold rallied off support at $1180 and is likely to test $1250/ounce. But the primary trend, as indicated by 13-week Twiggs Momentum (below zero), remains down. Respect of resistance at $1250 would confirm this. Breach of primary support at $1180 would offer a long-term target of $1000*.
* Target calculation: 1200 – ( 1400 – 1200 ) = 1000
Silver is also in a primary down-trend, retracing to test the new resistance level at $18.50/$19.00 per ounce. Respect would confirm the target of $15.50/ounce*.
* Target calculation: 18.5 – ( 21.5 – 18.5 ) = 15.5
Spot gold broke support at $1200/ounce, warning of a primary down-trend to test $1000*. Follow-through below $1180 would confirm. 13-Week Twiggs Momentum below zero already signals a primary down-trend.
* Target calculation: 1200 – ( 1400 – 1200 ) = 1000
Spot silver has already broken primary support and gold is expected to follow.
Silver broke long-term support at $18.50 per ounce, offering a target of $15.50/ounce*. First, expect retracement to respect the new resistance level. Gold is likely to follow Silver to a new four-year low.
* Target calculation: 18.5 – ( 21.5 – 18.5 ) = 15.5
Gold respected the new resistance level at $1240/ounce and is now testing $1200. Follow-through below $1180 would offer a long-term target of $1000*, while respect would suggest another rally to $1240. Declining 13-week Twiggs Momentum, below zero, further strengthens the bear signal.
* Target calculation: 1200 – ( 1400 – 1200 ) = 1000
Gold Bugs Index (representing un-hedged gold stocks) is also testing long-term support. Breach of support at 200 would strengthen the bear signal for Gold.
Rising Treasury yields and a stronger Dollar both add downward pressure to Gold. Higher interest rates increase the carrying cost of gold, while the Dollar competes with Gold both as a safe haven and as an appreciating asset (against other currencies).
The Dollar Index broke through resistance at the 2013 high of 84.75. Rising 13-week Twiggs Momentum, above zero, signals a primary up-trend. Expect retracement to test the new support level. Respect is likely and would offer a long-term target of 89*. Reversal below 84.50 is unlikely, but would warn of a correction.
* Target calculation: 84 + ( 84 – 79 ) = 89.00
The yield on ten-year Treasury Notes respected resistance at 2.65 percent and is retracing to test support at 2.50. Follow-through above 2.70 would signal an advance to 3.00, but 13-week Twiggs Momentum below zero continues to suggest a primary down-trend. Failure of support at 2.50 would indicate another test of primary support at 2.30.
* Target calculation: 2.30 – ( 2.60 – 2.30 ) = 2.00
Gold respected the new resistance level at $1240 after a brief retracement, confirming a primary down-trend. Declining 13-week Twiggs Momentum below zero strengthens the bear signal. Expect further support at $1200/ounce, breach would add further confirmation.
* Target calculation: 1200 – ( 1400 – 1200 ) = 1000
Silver is testing primary support at $18.50 per ounce. Breach of support would signal a down-trend and strengthen the bear signal for gold. Respect is unlikely, but would suggest further consolidation.
A rising Dollar and rising Treasury yields both put downward pressure on gold.
The Dollar Index is testing resistance at the 2013 high of 84.50. Rising 13-week Twiggs Momentum above zero signals a primary up-trend. Reversal below 81.50 is most unlikely. Upward breakout would offer a long-term target of 89*.
* Target calculation: 84 + ( 84 – 79 ) = 89.00
The yield on ten-year Treasury Notes broke resistance at 2.50 percent and is now consolidating at 2.60. Follow-through above 2.65 would signal an advance to 3.00. Respect would signal a decline to 2.00 percent*. 13-Week Twiggs Momentum recovery above zero would suggest a primary up-trend.
* Target calculation: 2.65 + ( 2.65 – 2.30 ) = 3.00
Weekly highlights:
The tenuous ceasefire in Eastern Ukraine appears to be holding, but Europe faces another challenge this week, with a Scottish referendum on independence. Predictions of financial mayhem in the event of a “Yes” vote are, I feel, exaggerated in an attempt to influence the outcome. The official position of the UK government is:
“If a majority of those who vote want Scotland to be independent then Scotland would become an independent country after a process of negotiations.”
The “process of negotiations” is likely to be comprehensive and would resolve most outstanding uncertainties in an orderly fashion. There has been much debate over economic issues, but it is no coincidence that the referendum is being held in the same year as the 700th anniversary of the Battle of Bannockburn, when Scots under Robert the Bruce defeated an English army led by Edward II to regain their independence.
Dow Jones Euro Stoxx 50 remains hesitant, retreating from resistance at 3300. Consolidation above 3200 would be a bullish sign, while breach of 3100 would threaten primary support at 3000. Another 13-week Twiggs Money Flow trough above zero would indicate buying pressure, but reversal below zero would warn of a down-trend.
* Target calculation: 3300 + ( 3300 – 3000 ) = 3600
The S&P 500 is edging lower and follow-through below 1980 would indicate another correction. Respect of support at 1950, however, would suggest that the up-trend is intact. Sideways movement on 21-day Twiggs Money Flow, reflects further consolidation.
* Target calculation: 2000 + ( 2000 – 1900 ) = 2100
CBOE Volatility Index (VIX) below 20 is typical of a bull market.
China’s Shanghai Composite Index breakout above 2250 signals a primary up-trend. The monthly chart, however, reflects further resistance at 2450/2500*. Rising 13-week Twiggs Money Flow indicates accelerating buying pressure. Reversal below 2250 is most unlikely, but would suggest further consolidation between 2000 and 2250.
* Target calculation: 2250 + ( 2250 – 2000 ) = 2500
The ASX 200 broke support at 5540/5560, warning of a correction. Bearish divergence on 21-day Twiggs Money Flow indicates medium-term selling pressure. Respect of support at 5440/5460 would indicate that the primary up-trend is intact, while a fall below 5360 would warn of a down-trend.
* Target calculation: 5650 + ( 5650 – 5450 ) = 5850
Gold broke support at $1240/ounce to signal a primary down-trend. Declining 13-week Twiggs Momentum, below zero, strengthens the signal. Follow-through below $1200 would confirm. The sell-off is being driven by a rising Dollar.
Crude oil is also falling, with Brent Crude testing its 18-month low. Nymex breach of $92/barrel would also signal a primary down-trend.
From Nick Cunningham at Oilprice.com:
The glut of supplies and weak demand is causing problems for OPEC, according to the cartel’s monthly report. OPEC lowered its demand projection for 2015 by 200,000 and in August, Saudi Arabia cut production by 400,000 bpd in an effort to stem oversupply.
It is probably no coincidence, but lower oil prices will hurt the Russian economy. As Nick points out:
Russia needs between $110 and $117 per barrel to finance its spending, which means the Kremlin can’t be happy as it watches Brent prices continue to drop. Combined with an already weak economy, Russia could see its $19 billion surplus become a deficit by the end of the year.
Falling oil prices will benefit the global economy in the medium-term. Subduing Russia’s territorial ambitions will be an added bonus.
Gold broke support at $1240/ounce to signal a primary down-trend. Declining 13-week Twiggs Momentum, below zero, strengthens the signal. Follow-through below $1200 would confirm. The sell-off is being driven by a rising Dollar.
Crude oil is also falling, with Brent Crude testing its 18-month low. Nymex breach of $92/barrel would also signal a primary down-trend.
From Nick Cunningham at Oilprice.com:
The glut of supplies and weak demand is causing problems for OPEC, according to the cartel’s monthly report. OPEC lowered its demand projection for 2015 by 200,000 and in August, Saudi Arabia cut production by 400,000 bpd in an effort to stem oversupply.
It is probably no coincidence, but lower oil prices will hurt the Russian economy. As Nick points out:
Russia needs between $110 and $117 per barrel to finance its spending, which means the Kremlin can’t be happy as it watches Brent prices continue to drop. Combined with an already weak economy, Russia could see its $19 billion surplus become a deficit by the end of the year.
Falling oil prices will benefit the global economy in the medium-term. Subduing Russia’s territorial ambitions will be an added bonus.
