Gold and Crude Oil

Nymex Light Crude continues to test resistance at $52/barrel. A rising Trend Index signals buying pressure. Breakout above $52 would offer a target of $54. There is a broad band of resistance between $50 and $54 as illustrated on the chart below. Breakout above $54/barrel would signal another long-term advance. But long-term consolidation below $54 is as likely.

Nymex Light Crude

High gold prices historically tend to coincide with high crude prices. The chart below shows crude oil and gold prices over the last 50 years, after adjusting for inflation.

Gold and Crude prices adjusted by CPI

Present low crude prices suggest that gold will weaken.

Spot Gold rallied off support at $1260/ounce on the daily chart but encountered resistance at $1300. Consolidation between $1290 and $1275 now indicates uncertainty, while a declining Trend Index warns of selling pressure.

Spot Gold

Target 1300 + ( 1300 – 1200 ) = 1400

Dollar strength is another key influence on gold prices. After a lengthy sell-off, the Dollar Index found support at 91. Breakout above resistance at 94 would indicate this is more than just a typical bear market rally. Until then, another test of primary support at 91 remains likely; breach would warn of another major decline.

Dollar Index

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