Which way gold?

The Dollar Index is consolidating on the weekly chart, indicating uncertainty. Respect of resistance at 80.00 would warn of another test of support at 78.00, while breakout would indicate continuation of the primary up-trend. In the longer term, breakout above 82.00 would offer a target of 86.00*, while failure of support at 78.00 would signal a primary down-trend. Reversal of 63-day Twiggs Momentum below zero would also warn of a primary down-trend.

US Dollar Index

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

Gold remains undecided despite a sharp fall on the Gold Bugs Index. The long tail on last week’s candle for spot gold indicates buying pressure at the $1600 support level. Recovery above $1700 would respect the long-term trendline and indicate another test of $1800, suggesting the start of a new up-trend. Breakout above $1800 would confirm, offering a target of $2000/ounce*. A 63-day Twiggs Momentum trough predominantly above the zero line would strengthen the bull signal. Reversal below support at $1600, however, would warn of a primary down-trend — confirmed if support at $1500 is broken.

Spot Gold

* Target calculation: 1800 + ( 1800 – 1600 ) = 2000

The Gold Bugs Index, representing un-hedged gold stocks, is in a clear primary down-trend since breaking support at 500. Peaks below zero on 63-day Twiggs Momentum also signal a strong down-trend.

Gold Bugs Index

4 thoughts on “Which way gold?

  1. pallavi says:

    can any one help me to how to trade commodities according which news…or chart

  2. Hal Martin says:

    Mr. Fat fingers (aka FED president & Co.) is immersed in all markets including Forex $DXY.

    There is hope for the AUSTRALIAN markets though, as long as there is uncertainty regarding the US dollar (which you so aptly described in your article item one).

    If you plot XAO or XJO with an overlay of the inverse US dollar (UDN_us), you will see a pretty good corellation.

    This relationship could end in a flash though, because the FED is controlling all things and their relationships. Forex, futures, volatility, precious metals, materials, energy and stock markets.

    The markets themselves will need to stand up and object before this environment will change, the US administration are trapped by their own initiative.

  3. I think Gold will continue in the long term to rise because the general public still feels as if the worlds currency’s can still fail. real estate is doing nothing around the world and everyone is over exposed to stocks.

  4. Ali says:

    I think the bears are still in control and gold still has another down leg. I think gold will most likely break the last low of $ 1522 before we see another high beyond the last high of September 2011.

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