Gold as a safe haven

The performance of gold can be volatile but at times it acts as a safe haven when geo-political tensions are high and confidence in fiat currencies is low.

Chris Puplava highlighted the recent strong correlation between gold and the Japanese Yen. That is no surprise as the Japanese yen also acts as a safe haven in times of political turmoil. Breakout above 114 to the yen (below 0.00875 on the chart below) would warn of a stronger Dollar and weaker gold prices. Breach of support at 108 (above 0.0092 on the chart below), on the other hand, would be bearish for the Dollar and bullish for gold.

Japanese Yen and Gold

The greenback continues its primary down-trend. Expect another test of primary support at the September low of 91. Breach is not yet likely but would be a strong bull signal for gold.

Dollar Index

Gold continues its test of medium-term resistance at $1300/ounce. Upward breakout is more likely (Twiggs Trend Index holding above zero indicates buying pressure) and would target the September high of $1350. Breach of primary support at $1260 is less likely but would warn of a test of primary support at $1200.

Spot Gold

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s