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Gold Breaks $1100 As Dollar Falls

By Colin Twiggs
November 9, 2009 10:00 p.m. ET (2:00 p.m. AET)

These extracts from my trading diary are for educational purposes and should not be interpreted as investment or trading advice. Full terms and conditions can be found at Terms of Use.



US Dollar Index

The US Dollar Index is testing support at 75. Breakout would signal a decline to 74*. In the long term, the dollar is headed for its 2008 low of 71. Breakout above 76.50 is unlikely, but would warn that the down-trend is ending.

US Dollar Index

* Target calculation: 75 - ( 76 - 75 ) = 74

Gold

Spot gold reached its short-term target of $1100*. Expect retracement to test the new support level at $1070. The long-term target for the primary advance is $1300*. Reversal below the rising trendline is most unlikely, but would warn of trend weakness.

Spot Gold

* Target calculations: 1000 + ( 1000 - 900 ) = 1100 and 1000 + ( 1000 - 700 ) = 1300

Gold miners are lagging rather than leading the spot metal price. The Market Vectors Gold Miners Index [GDX] formed a broadening wedge continuation pattern. Breakout above the upper channel would offer a target of $58*.

Market Vectors Gold Miners Index

* Target calculation: 50 + ( 50 - 42 ) = 58

Silver

Spot silver also displays a broadening wedge (right-angled ascending) continuation pattern. Breakout above the upper trend channel would offer a target of the March 2008 high of $21*. Respect of resistance at $18 is unlikely, but would warn of correction to the lower trend channel.

Spot Silver

* Target calculation: 18.50 + ( 18.50 - 16 ) = 21

Platinum

Platinum is edging cautiously upward. Breakout above $1360 would offer a target of $1420*. Reversal below the lower trend channel remains unlikely, but would warn that the primary up-trend is weakening.

Platinum

* Target calculations: 1360 + ( 1360 - 1300 ) = 1420

Crude Oil

Crude oil is also edging up cautiously. Narrow consolidation is a bullish sign and breakout above $80 would signal an advance to $84*. Reversal below $76, however, would test the rising trendline at $72. In the long term, the next resistance level is at $90, while failure of primary support at $66 would signal a trend reversal.

Crude Oil

* Target calculation: 80 + ( 80 - 76 ) = 84



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