Gold signals up-trend

Spot gold encountered resistance at $1350/ounce. Retracement that respects $1300 and the rising trendline would suggest an advance to $1400. Crossover of 13-week Twiggs Momentum above zero indicates a primary up-trend, especially following a bullish divergence on the weekly chart. Breakout above $1400 would confirm the signal, but still seems a long way off.

Spot Gold

The Gold Bugs Index is similarly testing resistance at 250. Breakout would signal an advance to 280. Again, bullish divergence on 13-week Twiggs Momentum and crossover above zero indicate a primary up-trend. Reversal below 210 is unlikely, but would warn of continuation of the down-trend.

Gold Bugs Index

Gold follows through

The Gold Bugs Index followed through above 225 after breaking its descending trendline, suggesting that a bottom is forming. Bullish divergence on 13-week Twiggs Momentum strengthens the signal. Reversal below 210 is unlikely, but would re-test primary support at 190.

Gold Bugs Index

Spot gold similarly followed-through above 1280, suggesting a bottom. Again, bullish divergence on 13-week Twiggs Momentum strengthens the signal. Another retracement to find support is likely before there is a serious attempt at the September 2013 high of 1430, which would complete a large double bottom. Reversal below 1240 is unlikely, but would warn of another test of primary support at 1180.

Spot Gold

Silver is likely to follow gold. Breakout above $20.50 would suggest another test of $25.00/ounce.

Spot Silver

Gold and silver bottom?

The Gold Bugs Index broke its descending trendline on the weekly chart and shows a bullish divergence on 13-week Twiggs Momentum. Both suggest reversal to a primary up-trend, but first we are likely to see a re-test of support at 190. Respect of 190 followed by recovery above the recent high at 225 would strengthen the reversal signal.

Gold Bugs Index

Spot gold displays a similar penetration of the descending trendline and bullish divergence on 13-week Twiggs Momentum, suggesting that a bottom is forming. Follow-through above 1280 would strengthen the signal. Reversal below 1240, however, would warn of another test of primary support at 1180. Breach of 1180 is unlikely, but would offer a target of 1000*.

Spot Gold

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

The silver chart, consolidating above primary support at $18/ounce, is mimicking gold. Recovery above $20.50 would also suggest that a bottom is forming.

Spot Silver

Gold: Bullish divergence

The Gold Bugs Index, representing un-hedged gold stocks, is often a leading indicator of spot prices. Bullish divergence on 13-week Twiggs Momentum and breach of the descending trendline suggest that a bottom is forming. Only recovery above 280 would signal a primary reversal at present, but another retracement that respects support at 190 would change that.

Gold Bugs Index

Spot gold broke resistance at $1250/ounce and we should expect retracement to test the new support level. Bullish divergence on 13-week Twiggs Momentum and breach of the descending trendline suggest that a bottom is forming. We may face an extended consolidation if falling interest rates boost gold while a stronger dollar exerts downward pressure. Failure of $1200 is now unlikely, but would warn of a decline to 1000*.

Spot Gold

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

Gold Bugs bullish

The Gold Bugs Index, representing un-hedged gold stocks, is often a leading indicator of spot prices. Bullish divergence on 13-week Twiggs Momentum suggests that a bottom is forming and is strengthened by breach of the descending trendline. Only recovery above 280 would signal reversal to a primary up-trend, but retracement that respects support at 190 would be a bullish indication.

Gold Bugs Index

Dollar Index

Rising interest rates and a stronger dollar, however, are likely to exert downward pressure on gold.

The yield on ten-year Treasury Notes respected resistance at 3.00 percent. Breach of support at 2.75 and the rising trendline would test primary support at 2.50, but failure of this level 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 is again testing resistance at 81.50 after a bullish higher trough and breach of the descending trendline. Breakout would signal a primary advance to 83.00*, while recovery of 13-week Twiggs Momentum above zero would strengthen the signal. Respect of resistance is less likely, but reversal below 80 would warn of further weakness.

Dollar Index

* Target calculation: 81.5 + ( 81.5 – 80 ) = 83

Spot Gold

Spot gold respected long-term support at $1200/ounce and is testing resistance at $1260/ounce as well as the descending trendline. Respect would signal another test of $1200, while breakout above $1260 would suggest that a bottom is forming. Recovery of 13-week Twiggs Momentum above zero would strengthen the signal. Failure of $1200, however, would warn of a decline to 1000*.

Spot Gold

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

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

Gold miners warn of weaker spot price

The Gold Bugs Index, often a leading indicator of spot prices, is headed for a test of the 2008 low at 150 after breaking support at 210. A 13-week Twiggs Momentum peak below zero suggests continuation of the primary down-trend.

Gold Bugs Index

The ASX Gold Index also signals another decline after breaking support at 2000. Retracement that respects the new resistance level would strengthen the signal.

ASX Gold Index

Spot gold has not yet broken support at $1200/ounce, but the metal is likely to follow the two miners indices. A 13-week Twiggs Momentum peak below zero would strengthen the signal. Breach of primary support would offer a target of $1000/ounce*.

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 is headed for a test of 3.00 percent after breaking medium-term resistance at 2.75. Breakout would indicate a primary advance to 3.50 percent*. Reversal below the rising trendline is unlikely, but would warn of another test of 2.50. Higher yields are likely to strengthen the dollar.

10-Year Treasury Yields

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

The Dollar Index retraced to test medium-term resistance at 80.50. Breach of the declining trendline would suggest a rally to 81.50. Continuation of the decline is unlikely after Fed commencement of the taper and upward breakout above 81.50 would signal a primary advance. Recovery of 13-week Twiggs Momentum above zero would strengthen the signal.

Dollar Index

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

Gold support at $1200

Gold

The long tail on this week’s candle reflects buying support for spot gold at $1200/ounce. Recovery above $1250 would suggest another rally to $1350. But the 63-day Twiggs Momentum peak below zero warns of a down-trend. And breach of primary support at $1200 would confirm.

Spot Gold

* Target calculation: 1250 – ( 1350 – 1250 ) = 1150

Often a leading indicator of spot prices, the Gold Bugs Index, representing un-hedged gold stocks, continues in a primary down-trend after breaking support at 210. Completion of a 13-week Twiggs Momentum peak below zero would strengthen the signal.

Gold Bugs Index

Dollar Index

The yield on ten-year Treasury Notes broke through medium-term resistance 2.75, suggesting a primary advance to 3.50 percent*. Breakout above 3.00 percent would confirm. Reversal below the rising trendline is unlikely, but would warn of trend weakness and another test of 2.50. Higher yields are likely to strengthen the dollar.

10-Year Treasury Yields

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

The Dollar Index shows evidence of strong support at 80.50, consolidating in a narrow band between 80.50 and 81.00 over the last 2 weeks. Upward breakout would suggest a primary advance; confirmed if resistance at 81.50 is broken. Breach of support at 80.50 remains as likely and would warn of another test of primary support at 79.

Dollar Index

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

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

Crude Oil

Nymex crude penetrated its downward trendline but this first bear rally may not be the last. Expect resistance between $98 and $100/barrel. Respect remains likely and would indicate another test of support at $92. Brent crude reflects global supply constraints and is likely to find strong support at $100/barrel.

Brent Crude and Nymex Crude

Commodity Prices

A rising Shanghai Composite Index is supporting commodity prices. Recovery of the Dow Jones-UBS Commodity Index above 126 would indicate a bear trap. Breakout above 130 would suggest reversal to a primary up-trend; and cross-over of 13-week Twiggs Momentum above zero would strengthen the signal. Respect of resistance at 126 and a primary decline now appear unlikely.

Dow Jones UBS Commodities Index

Gold: $1200 next?

Spot gold consolidating in a narrow band below support at $1250/ounce suggests a test of $1200. The 63-day Twiggs Momentum peak below zero strengthens the signal. Breakout below the June low ($1200) would confirm a primary down-trend. Recovery above $1260 is unlikely, but would indicate a rally to $1350.

Spot Gold

* Target calculation: 1250 – ( 1350 – 1250 ) = 1150

Silver broke through support at $20.50/ounce and is headed for a test of primary support at $18/ounce. Completion of a 13-week Twiggs Momentum peak below zero warns of a primary down-trend. Breach of primary support would confirm.

Spot Silver

Often a leading indicator of spot prices, the Gold Bugs Index, representing un-hedged gold stocks, broke primary support at 210 to signal a primary down-trend. Completion of a 13-week Twiggs Momentum peak below zero would strengthen the signal.

Gold Bugs Index

Dollar Index

The yield on ten-year Treasury Notes retreated below 2.75. Breakout would signal a fresh primary advance, with a target of 3.50 percent* (breakout above 3.00 percent would confirm). Reversal below the rising trendline is less likely, but would warn of trend weakness and another test of 2.50. Higher yields would help strengthen the dollar.

10-Year Treasury Yields

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

The Dollar Index retraced to test the new support level at 80.50. Completion of a 13-week Twiggs Momentum peak below zero would warn of a primary down-trend. Breach of primary support at 79 would confirm. Breakout above 81.50 remains as likely, however, and would indicate an advance to 84*.

Dollar Index

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

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

Crude Oil

Nymex crude is undergoing a strong correction and is likely to test primary support at $85/$86 per barrel. Reversal of 13-Week Twiggs Momentum below zero warns of a primary down-trend. Brent crude is rising despite an easing of tensions with Iran. The primary reason for the divergence is supply. Iain Armstrong, oil analyst at Brewin Dolphin, earlier in the year explained that Brent is effectively a global brand — affected by global issues of supply/demand — while Nymex is a “local” brand and benefits from plentiful shale oil in the US.

Brent Crude and Nymex Crude

Commodity Prices

A resurgent Shanghai Composite Index is supporting commodity prices. Recovery of the Dow Jones-UBS Commodity Index above 126 would indicate a bear trap. A peak below zero on 13-week Twiggs Momentum, however, warns of a continuing down-trend. Respect of the resistance level, as indicated by follow-through below 122, would signal a decline to 114*.

Dow Jones UBS Commodities Index

* Target calculation: 124 – ( 134 – 124 ) = 114

Dollar falls and gold rises

The Dollar Index respected resistance at 80.50, breaking below 80 to confirm a primary decline. Breach of the 2012 lows at 79 would confirm a long-term target of 76.50*. The falling dollar is boosting gold prices.

Dollar Index

* Target calculation: 80.5 – ( 84.5 – 80.5 ) = 76.5

The yield on ten-year Treasury Notes broke through support at 2.60 percent, heading for primary support at 2.40 percent. Falling yields depress the dollar while lowering the opportunity cost of holding precious metals, exerting upward pressure on gold. Respect of primary support, however, would warn of an advance to 3.60 percent.

10-Year Treasury Yields

* Target calculation: 3.00 + ( 3.00 – 2.40 ) = 3.60

Gold

Spot gold recovered above $1300 and its descending trendline on the daily chart, suggesting another primary advance. Breakout above $1350 would confirm, offering a target of 1600*. Respect of resistance, however, would warn of another test of $1250.

Spot Gold

* Target calculation: 1425 + ( 1425 – 1250 ) = 1600

The weekly chart shows how penetration of the September high would signal a new primary up-trend. Strengthened if 13-week Twiggs Momentum crosses to above zero.

Spot Gold

Bullish divergence of 13-week Twiggs Momentum on the Gold Bugs Index, representing un-hedged gold stocks, suggests a primary up-trend. Breakout above 280 would confirm.

Gold Bugs Index

Crude Oil

Nymex crude broke medium-term support at $98/barrel. Expect retracement to test the new resistance level, but respect would warn the primary up-trend is over. Divergence of Brent crude reflects both a strengthening European recovery and continued supply threats in the Middle East.

Brent Crude and Nymex Crude

Commodity Prices

China’s Shanghai Composite Index is testing medium-term support at 2150. Downward breakout would warn of another correction — a bearish sign for commodity prices. Dow Jones-UBS Commodity Index consolidation between 124 and 130 reflects indecision. Breakout will indicate future direction. A 13-week Twiggs Momentum peak below zero would warn of a continuing down-trend, while cross to above zero would suggest a reversal.

Dow Jones UBS Commodities Index

* Target calculation: 130 + ( 130 – 125 ) = 135

Gold and commodities falling while Dollar weakens

Gold is drifting lower after breaking support at $1300/ounce. Penetration of support at $1270 would signal a re-test of primary support at $1200, but reversal above $1300 remains as likely and would indicate another test of $1350. Breakout above $1350 would target $1400.

Spot Gold

The above feed is from a new data supplier. Data is 10-minute delayed and time-stamped US Central Time (Chicago exchanges). After recent problems with data reliability we have cancelled the contract with our current supplier and will switch to the new source within a few days.

The Gold Bugs Index, representing un-hedged gold stocks, continues its sharp fall. Follow-through below 200 would indicate a test of the 2008 low at 160 — a bearish sign for the spot metal.

Spot Gold

Dollar Index

The Dollar Index is heading for a test of primary support at 80.50. Respect of the rising trendline would be a bullish sign, but bearish divergence (and reversal below zero) on weekly Twiggs Momentum warns of weakness. Breach of 80.50 would signal a primary down-trend.
Dollar Index

Crude Oil

Nymex WTI light crude twice respected resistance at $108/barrel. Reversal below last week’s low at $103 would warn of a test of $98, while respect would suggest another strong advance. Brent crude is likely to track its US counterpart closely.

Brent Crude and Nymex Crude

* Target calculation: 98 + ( 98 – 86 ) = 110

Commodities

Copper is testing long-term support at $6800/ton. Follow-through below $6600 would confirm another primary decline.
Dow Jones UBS Commodities Index
The Shanghai Composite Index is holding above its 2012 low  at 1950, but further weakness is likely and would drive commodity prices lower. Dow Jones-UBS Commodity Index breached long-term support at 125/126, offering a target of the 2009 low at 100*. Not good news for Australian resources stocks, even if the impact is cushioned by a falling Aussie Dollar.

Dow Jones UBS Commodities Index

* Target calculation: 125 – ( 150 – 125 ) = 100

Gold and commodities bear rally likely to fail

Gold found support at $1200/ounce, but the rally was short-lived, encountering resistance at $1260. Breakout would test resistance at $1300/1320, while reversal below $1230 would again test $1200. Continuation of the down-trend is likely, and failure of support at $1200 would offer a medium-term target of $1100*.

Spot Gold

* Target calculation: 1200 – ( 1300 – 1200 ) = 1100

The Gold Bugs index (representing un-hedged gold stocks) diverged from the spot price in 2012 and retreated, relatively, a lot further since 2011. Does that mean the spot price will follow — or that gold stocks are oversold? I have no idea how far gold will eventually fall, but I do take this as a bearish sign for the metal.
Spot Silver

Crude Oil

Nymex WTI light crude broke resistance at $98/barrel and follow-through above $100 would confirm a primary up-trend. Brent continues to range between $100 and $106, with the spread narrowing to less than $4/barrel. Rising Nymex crude prices reflect a stronger US economy, and should ensure the spread closes completely in the months ahead.

Brent Crude and Nymex Crude

Commodities

Commodity prices are largely driven by Chinese demand, as reflected by the correlation between Dow Jones/UBS Commodity Index and the Shanghai Composite. The Shanghai is in a strong primary down-trend and likely to drag commodities even lower. Breakout below support at 125/126 would offer a long-term target of the 2009 low at 100*. Not good news for Australian resources stocks, even though the impact is cushioned by a falling Aussie Dollar.

Dow Jones UBS Commodities Index

* Target calculation: 125 – ( 150 – 125 ) = 100

Gold rally falters, while bond yields rise

Gold’s bear rally has run out of steam, with continued tests of support at $1440/$1450. Breach would penetrate the rising trendline, indicating another test of primary support at $1320. Target for the decline would be $1200*. Breakout above $1500 is unlikely, but would test $1550.

Spot Gold

* Target calculation: 1350 – ( 1500 – 1350 ) = 1200

The Gold Bugs Index, representing un-hedged gold stocks, behaves like a leveraged gold instrument. So far there is no sign of a bounce. Breach of support at 260 would warn of another decline.
Gold Bugs Index
My bullish outlook for gold is fading in the face of stubborn deflationary pressures faced by central banks.

Treasury Yields

Ten-year treasury yields rallied sharply at the end of last week and are now testing resistance at 1.80%. Respect of resistance remains likely — after all this is a down-trend — and would suggest another test of the all-time low at 1.40%. Breakout above 1.80% would signal a test of resistance at 2.00/2.05%, while breach of that level would signal a primary up-trend. The thirty year secular bear trend (in yields) remains downward and would only be reversed by a rise above 4.00%.

Dollar Index

Crude Oil

Brent Crude is testing its former support level at $106/barrel. Respect is likely and would offer a target of $92*. Nymex WTI broke out of its trend channel, but the trend remains downward until resistance at $98 is broken. A classic pair trade, the spread between the two is likely to narrow as the European economy under-performs.

Brent Crude and Nymex Crude

Commodities

Commodity prices continue to diverge from stocks, with the S&P 500 advancing while Dow Jones – UBS Commodity Index is headed for primary support at 125.

Dow Jones UBS Commodities Index

Reason for the disconnect is evident on the next chart. Demand from China has been driving commodities for most of the last decade. A slowing Chinese economy more than offset rising demand from the USA.

Dow Jones UBS Commodities Index

Gold and commodities fall as bonds rise

Gold is testing short-term support at $1450. Breach would be likely to penetrate the rising trendline, indicating another test of primary support at $1320. Reversal below $1400 would warn of a further down-swing. Breach of $1320 would confirm, with the next major support level at the 2008 high of $1000.

Spot Gold

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

The Gold Bugs Index, representing un-hedged gold stocks, is falling rapidly. The index behaves like a leveraged gold instrument. Fixed costs of extraction make miners extremely sensitive to relatively small fluctuations in the gold price — which is why many miners hedge. The index is headed for a test of its 2008 low, which equated to a spot price of $700/ounce. I am not predicting that gold will fall below its cost of production, variously estimated at between $900 and $1150 per ounce, but expect further weakness.
Gold Bugs Index
My bullish outlook for gold is fading (into the future) as deflationary pressures faced by central banks grow.

Treasury Yields

Money continues to flow into bonds — reflecting a lower inflation outlook — and further outflows from gold are likely. Ten-year treasury yields broke support at 1.70% — prior to 2012 the lowest level in the 200 year history of the US Treasury — and a test of the all-time low at 1.40% is likely.

Dollar Index

Crude Oil

Brent Crude is headed for a re-test of its former support level at $106/barrel. Respect is likely and would offer a target of $92*. Nymex WTI recovered above $90/barrel, but further weakness is expected. Reversal below $90 would warn of a swing to the lower trend channel around $84 . Falling crude prices are a healthy long-term sign for the economy, but indicate falling demand and medium-term weakness.

Brent Crude and Nymex Crude

* Target calculation: 99 – ( 106 – 99 ) = 92

Peter Glover and Michael Economides in The Coming Arab Winter write:

Within just a few years of it taking off, the US shale gas and oil industry is enabling America to become increasingly self-sufficient with imports from the Middle East greatly reduced. The US is closing in on eclipsing Saudi energy production capacity. The 2012 edition of the IEA’s World Energy Outlook says America will surpass Saudi as the world’s biggest oil producer by 2020; such is the rate of current US oil development it could well be before then.

According to one recent report, the dramatic expansion of US production could push global spare oil capacity to exceed 8 million barrels per day. At that point OPEC could lose its ability to set or influence prices and global oil prices could drop sharply. While that would take a heavy toll on many Western energy producers, it would prove disastrous for OPEC’s member states.

The peak oil myth is discredited. Expect long-term weakness in crude prices as the US, China, Australia and elsewhere ratchet up shale gas production.

Commodities

Commodity prices continue to diverge from stocks, with the Dow Jones – UBS Commodity Index headed for primary support at 125. Breach would warn of a decline to the 2008 low of 100. Declining 13-week Twiggs Momentum, below zero, warns of a down-trend; reversal below the 2012 low of -15% would strengthen the signal. Stock prices are precariously high in relation to commodities. Recovery of US housing is unlikely to drive a massive construction boom as there must still be significant over-supply of existing units.

Dow Jones UBS Commodities Index

Gold, TIPS and inflation

The Dollar Index rally to test resistance at 81.00/81.50 appears to be faltering. Respect of resistance would confirm the primary down-trend. Reversal of 63-day Twiggs Momentum below zero earlier indicated a trend change; a peak below zero would strengthen the signal.

US Dollar Index

* Target calculation: 81 – ( 84 – 81 ) = 78

Spot Gold continues to test resistance at $1800 per ounce*. A 63-day Twiggs Momentum trough above zero would signal a primary up-trend, while breakout above $1800 would confirm.

Spot Gold

* Target calculation: 1650 + ( 1650 – 1500 ) = 1800

Rising gold prices indicate increased inflation expectations. The spread between 10-year Treasury yields and the equivalent TIPS (Treasury Inflation Protected Securities) yield also spiked up after the latest QE announcement but then retreated. The inflation effect of quantitative easing by the Fed is likely to be muted by deflationary pressures from private debt contraction — and a slow-down in government debt expansion after November (no matter who wins the election) — working in the opposite direction. I believe the Fed goal is to manufacture a soft landing rather than to generate inflation, which would go against their mandate.

10-Year Treasury Yield v. 10-Year TIPS Yield

Commodities: The RJ/CRB Commodities index has been delisted by ICE Futures US (formerly NYBOT). For details click here.

The equivalent DJ-UBS Commodity Index is testing resistance at 150/155. Respect would warn of another test of primary support at 125, but also that inflation expectations remain muted.

DJ-UBS Commodity Index

Brent Crude is correcting despite the rise in inflation expectations, reflecting slowing economic activity rather than improved security. Follow-through below $108 per barrel would indicate a correction to $100, while reversal of 63-day Twiggs Momentum below zero would suggest a primary down-trend.

ICE Brent Crude Afternoon Markers

Dollar bounce, gold and copper retrace

The Dollar Index is retracing to test resistance at 81.00/81.50. Respect would confirm the primary down-trend, as indicated by 63-day Twiggs Momentum below zero.

US Dollar Index

* Target calculation: 81 – ( 84 – 81 ) = 78

Spot Gold is retracing below resistance at $1800 per ounce*. A 63-day Twiggs Momentum trough above zero would signal a primary up-trend. Breakout above $1800 would confirm, indicating rising inflation expectations in response to QE3.

Spot Gold

* Target calculation: 1650 + ( 1650 – 1500 ) = 1800

Copper is also retracing. Respect of 8000 would be a bullish sign. Again, a 63-day Twiggs Momentum trough above zero would indicate a primary up-trend. Breakout above 8600 would confirm, indicating that global economic activity is reviving. Failure of support at 8000 would suggest the opposite.

Copper

Brent Crude is falling after breaking support at $112 per barrel. 63-Day Twiggs Momentum below zero warns of a primary down-trend. The fall, despite increased inflation expectations, reflects slowing economic activity rather than increased security. Syria and Iran remain concerns in the Middle East. Test of support at $100 would warn of another down-turn.

ICE Brent Crude Afternoon Markers

Dollar down, gold up but crude falls

The Dollar Index is in a primary down-trend, as indicated by 63-day Twiggs Momentum below zero. Expect a test of support at 78.00. An ensuing rally that respects resistance at 81.00/81.50 would reinforce the primary down-trend.

US Dollar Index

* Target calculation: 81 – ( 84 – 81 ) = 78

Spot Gold is headed for a test of $1800 per ounce*. Recovery of 63-day Twiggs Momentum above zero indicates a primary up-trend.

Spot Gold

* Target calculation: 1650 + ( 1650 – 1500 ) = 1800

The Gold Bugs Index, representing un-hedged gold stocks, reinforces the primary up-trend in the spot metal, with breakout above the double-bottom signaling an advance to 530*. Again, 63-day Twiggs Momentum above zero strengthens the signal.

Gold Bugs Index

* Target calculation: 460 + ( 460 – 390 ) = 530

The CRB Commodities Index fell sharply on the daily chart after last week’s run-up. Failure of initial support at 305 would indicate that momentum is slowing, but only a fall below 295 would warn of a reversal. A 63-day Twiggs Momentum trough above zero would indicate a primary up-trend.

CRB Non-Energy Commodities Index

Brent Crude fell sharply after breaking support at $112 per barrel. Upward breakout would test $126. 63-Day Twiggs Momentum reversal below zero warns of a primary down-trend. Expect a test of support at $100.

ICE Brent Crude Afternoon Markers

Nymex WTI light crude also broke medium-term support, closing at $92.12 on Wednesday (October delivery). Expect a test of  primary support at $76.00/$78.00.

Nymex WTI Light Crude

Dollar down-trend, gold and commodities rally

The Dollar Index broke primary support at 81.00 and the rising trendline on the weekly chart, signaling reversal to a primary down-trend. Fall of 63-day Twiggs Momentum below zero strengthens the signal. Expect retracement to test the new resistance level at 81.00/82.00. Respect is likely and would confirm the primary down-trend.

US Dollar Index

* Target calculation: 81 – ( 84 – 81 ) = 78

Spot Gold continues its advance toward $1800 per ounce*. Recovery of 63-day Twiggs Momentum above zero indicates a primary up-trend.

Spot Gold

* Target calculation: 1650 + ( 1650 – 1500 ) = 1800

The 4-hour chart shows gold advancing in even steps of $30: from $1590 to $1630, $1660, $1690, and $1720. Each sharp jump is followed by several days consolidation, before another breakout. Occasional false starts — above $1700 — and reversals — below $1650 — keep traders on their toes, but this is a strong trend and should yield good results. False breaks at $1600, $1650 and $1700 remind us to be vigilant at $1750.

Spot Gold 4-Hour Chart

The Gold Bugs Index, representing un-hedged gold stocks, broke out of its double-bottom to signal a primary advance to 530*. Recovery of 63-day Twiggs Momentum above zero strengthens the signal.

Gold Bugs Index

* Target calculation: 460 + ( 460 – 390 ) = 530

The CRB Commodities Index is also rising in response to the weaker dollar. Recovery of 63-Day Twiggs Momentum above zero suggests a primary up-trend. Expect a test of the 2012 high at 325.

CRB Non-Energy Commodities Index

Brent Crude continues to consolidate between $112 and $116 per barrel. Upward breakout would test $126. 63-Day Twiggs Momentum recovery above zero strengthens the bull signal. Reversal below $112 is unlikely, but would signal another test of support at $100.

ICE Brent Crude Afternoon Markers