The Dollar Index crashed on this week’s Trump turmoil. Follow-through below 98.50 confirms a primary down-trend with a medium-term target of the 2016 low at 93.
* Target: 99 – ( 104 – 99 ) = 94
Spot Gold found support at $1250 after Thursday’s retracement. Follow-through above $1260 would indicate another primary advance, with a target of $1300. Reversal below $1220 is unlikely but would signal a primary down-trend.
The Dollar Index rally ran into resistance at 100. Reversal below last week’s low would signal a medium-term decline to 94*.
* Target: 99 – ( 104 – 99 ) = 94
Spot Gold found short-term support at $1220. Recovery above $1250 would signal resumption of the primary up-trend but a test of $1200 is more likely and breach would signal reversal to a primary down-trend.
Commodities are falling, with the DJ-UBS Commodity Index testing support at 82.
Despite the Dollar Index breaking support at 100.
Spot Gold followed, breaking medium-term support at $1240/$1250. A test of primary support at $1200/ounce is now likely.
Breach of $1200 would signal a primary down-trend. Respect would confirm the primary up-trend. I still view gold stocks as a form of “Trump insurance” and am reluctant to part with exposure to this sector.
The Dollar Index broke support at 100 despite strengthening interest rates, warning of a down-trend. Target for a decline would be the May 2016 low of 93.
China has burned through a trillion dollars of foreign reserves in the last 3 years, attempting to support the yuan. I believe the sell-off is unlikely to abate and plays a major part in the Dollar’s weakness.
A falling Dollar would strengthen demand for gold. Spot Gold is retracing from resistance at $1300/ounce and is likely to find support at $1240/$1250. Respect of support would suggest another advance; confirmed if gold breaks $1300.
Spot Silver displays a more bearish medium-term outlook, however, with a stronger correction testing support at $17.00/ounce. Breach of support would test the primary level at $15.65 and warn of further gold weakness.
The Dollar Index continues its downward path, having breached support at 100. Follow-through below the rising trendline at 99 would warn of a test of primary support at 93.
Spot Gold has benefited. Currently testing resistance at $1250/ounce, narrow consolidation is a bullish sign. Follow-through above $1260 would confirm a target of $1300. Crossover of 13-week Momentum to above zero is also bullish, suggesting a primary up-trend.
The Fed is expected to hike interest rates next week. 10-year Treasury yields broke resistance at 2.5 percent, signaling an advance to the 2013/2014 high of 3.0 percent. Breakout above 3.0 percent is still a way off but would complete a large double bottom signaling the end of the 30-year secular bull market in bonds. Rising interest rates are bearish for gold.
The Dollar Index rally continues to meet resistance, with tall shadows on the last four weekly candles signaling selling pressure. Rising interest rates could strengthen the advance, with bearish consequences for gold, but Chinese sell-off of foreign reserves (to support the Yuan) is working against this.
Spot Gold is testing support at $1200/ounce. Recovery above $1250 would indicate that the recent down-trend has ended. But breach of support is more likely and would warn of another test of long-term support at $1050/ounce.
Federal Reserve Chairwoman Janet Yellen signaled the central bank is likely to raise short-term interest rates at its March meeting and suggested more increases are likely this year if the economy performs as expected.
“At our meeting later this month, the [Federal Open Market] Committee will evaluate whether employment and inflation are continuing to evolve in line with our expectations, in which case a further adjustment of the federal funds rate would likely be appropriate,” Ms. Yellen said in remarks prepared for delivery at the Executives’ Club of Chicago.
The Dollar Index rally continues to meet resistance, with tall shadows on the last three weekly candles signaling selling pressure. Rising interest rates would strengthen the advance, with bearish consequences for gold.
Spot Gold hesitated at $1250/ounce. Rising interest rates also increase the opportunity cost of holding precious metals. Reversal below $1200 would warn of another decline but recovery above $1250 remains more likely and would signal an advance to $1300.
10-Year Treasury Yields are testing support at 2.30%. Expect this to hold. Breach of the rising trendline would warn of a correction but this seems unlikely with the Fed intent on normalizing interest rates. Breakout above 2.50% would offer a target of 3.0%.
The Dollar Index rally remains muted since finding support at 100. Rising long-term yields would fuel the advance, with bearish consequences for gold.
China’s Yuan is consolidating. Resistance on USDCNY at 7 Yuan is likely to be tested soon.
The PBOC has been burning through its foreign reserves to slow the rate of depreciation against the Dollar, to create a soft landing. A sharp fall would destabilize global financial markets and fuel capital flight from China.
Spot Gold broke through resistance at $1250, signaling an advance to $1300.
10-Year Treasury Yields are consolidating below resistance at 2.50%. Long tails suggest medium-term buying pressure. Breakout is likely and would offer a target of 3.0%.
The Dollar Index rally has so far been muted since finding support at 100. But rising long-term yields are likely to fuel the advance, with bearish consequences for gold.
Spot Gold is consolidating below $1250/ounce. Reversal below $1200 would warn of another decline. Breach of primary support at $1130 would confirm. Arguments for a further advance appear weak, but breakout above $1250 would signal an advance to $1300.
The Dollar Index paused in its advance and is likely to retrace to test the new support level at 100. Target for the advance is 107*.
* Target medium-term: 100 + ( 100 – 93 ) = 107
Gold paused in its primary decline, in response. The target is unchanged at the December 2015 low of $1050/ounce. Retracement that respects the resistance level at $1200 would strengthen the bear signal.
Interest rates are surging as the market anticipates rising inflation under a Trump presidency. 10-Year Treasury yields are testing resistance at 2.50. Breakout is likely and would signal a test of resistance at 3.0 percent. Penetration of 3.0 percent would warn that the 30-year secular down-trend in Treasury and bond yields is coming to an end.
The Dollar strengthened in response to rising interest rates, with the Dollar Index breaking resistance at 100 to signal a primary advance with a target of 107*.
* Target medium-term: 100 + ( 100 – 93 ) = 107
Gold breached primary support at $1200 in response, signaling a primary decline with a target of the December 2015 low of $1050/ounce.
In the long-term, higher inflation and a weakening Yuan could both fuel demand for gold as a store of value. But the medium-term outlook is bearish.
Long-term interest rates continue their decline, with 10-year Treasury yields testing support at 1.65 to 1.70 percent. Breach would signal a test of the all-time (July 2012) low of 1.40 percent.
Gold rallied in response, breaking initial resistance at $1250/ounce to signal a test of $1300.
The Chinese appear to have resumed selling foreign reserves to support the Yuan, with USDCNY running into resistance at 6.60. PBOC sale of reserves would weaken the Dollar, boosting demand for Gold. Failure to support the Yuan is unlikely, but would increase safe haven demand for Gold from Chinese investors.
The Dollar Index, representing predominantly the Euro and Yen crosses, fell sharply. Breach of support at 93 would confirm the primary down-trend earlier signaled by 13-week Momentum below zero.
The Australian All Ordinaries Gold Index broke through 4500 to signal another advance, with the weakening Australian Dollar adding further impetus. Gaps between trough lows (orange line) and preceding highs (brown line) indicate strong buying pressure.
Disclosure: Our Australian managed portfolios are invested in gold stocks.