Gold hesitates in downward trend

The Gold Bugs Index, often a leading indicator of spot prices, is retracing to test the new resistance level at 210. Respect would confirm a decline to the 2008 low at 150. Recovery above 280 — and 13-week Twiggs Momentum crossover to above zero — would signal reversal to a primary up-trend, but that is unlikely at present.

Gold Bugs Index

Spot gold respected long-term support at $1200/ounce and follow-through above 1250 would suggest a bottom is forming. Recovery of 13-week Twiggs Momentum above zero would indicate a primary up-trend. Failure of $1200 is more likely, however, and would warn of a decline to 1000*.

Spot Gold

* Target calculation: 1200 – ( 1400 – 1200 ) = 1000

Dollar Index

Higher interest rates and a stronger dollar would increase downward pressure on gold.

The yield on ten-year Treasury Notes encountered strong resistance at 3.00 percent. Retracement is headed for a test of support at 2.75. Breach of that level would test primary support at 2.50, but reversal below 2.50 is unlikely. Breakout above 3.00 is more likely and would offer a target of 3.50 percent*.

10-Year Treasury Yields

* Target calculation: 3.00 + ( 3.00 – 2.50 ) = 3.50

The Dollar Index has twice respected resistance at 81.50 and we can expect another test of medium-term support at 79.80, but penetration of the declining trendline indicates downward momentum is fading. Respect of 79.80 would suggest another test of 81.50. Breakout above 81.50 would signal a primary advance, with recovery of 13-week Twiggs Momentum above zero strengthening the signal.

Dollar Index

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

2 thoughts on “Gold hesitates in downward trend

  1. john brims says:

    Hi Colin According to me it appears that the MONTHLY momentum of the AOX has turned down and about to cross zero line and indicating the need for caution.. Regards john brims

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