Gold breaks out on dollar weakness

Raised expectations of further quantitative easing by the Fed caused the Dollar to fall sharply. Penetration of the rising trendline by the US Dollar Index would warn that a top is forming. Reversal of 63-day Twiggs Momentum below zero would suggest a primary trend reversal. Respect of support, however, would indicate that the market overreacted and the primary trend will continue.

US Dollar Index

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

Spot Gold broke resistance at $1650 per ounce, indicating  a primary up-trend. Recovery of 63-day Twiggs Momentum above zero strengthens the signal. A trough above zero or retracement that respects the new support level would confirm the breakout, suggesting an advance to $1800.

Spot Gold

The CRB Commodities Index also benefited from the weaker dollar, breaking medium-term resistance at 305 to indicate a test of the February high at 325. Recovery of 63-Day Twiggs Momentum above zero suggests a trend reversal, but only a trough above zero would confirm.

CRB Commodities Index

Brent Crude continues to test resistance at $115 per barrel. Breakout would indicate a test of the March high at $126. Reversal below $108 is unlikely, but would signal another test of support at $90/$100. 63-Day Twiggs Momentum recovery above zero would strengthen the bull signal.

ICE Brent Crude Afternoon Markers

11 thoughts on “Gold breaks out on dollar weakness

  1. Whenever there’s this great or bad news about gold stocks, the only thing that investors do is watch. Some don’t even do anything ‘bout it. If the inflation rate is surely decreasing, then make it high. There are always things that could help us with it.

  2. haroon says:

    When FDR Chairman Bernanke was asked recently if gold was a unit of currency, his reply was no, it’s a precious metal. Is that a signal to buy gold, or what?

  3. dube says:

    hi! so do you think that gold will go up today?

  4. everythinghk says:

    Do you thin George Soros had and advanced warning? He invested $130M in gold bullion 2 weeks ago and got totally out of banking stocks
    With the Republican flirting with the idea of the US returning to the Gold standard, anybody up for $6400/ounce gold?

    HK

  5. Jake says:

    In a word: Great. Thank you.

  6. Robert Skinner says:

    Dead right on Gold and gold stocks!!! which have been subject to excessive pesamism…. now watch the short covering

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