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Gold and commodities fall as the dollar rises

By Colin Twiggs
June 27th, 2013 3:00 a.m. EDT (5:00 p:m AET)

These extracts from my trading diary are for educational purposes. Any advice contained therein is provided for the general information of readers and does not have regard to any particular person's investment objectives, financial situation or needs and must not be construed as advice to buy, sell, hold or otherwise deal with any securities or other investments. Accordingly, no reader should act on the basis of any information contained therein without first having consulted a suitably qualified financial advisor. Full terms and conditions can be found at Terms of Use.



Gold is falling fast, but should find short/medium-term support at $1200/ounce*. Breach of that level would offer a target of $1000.

Gold

* Target calculation: 1350 - ( 1500 - 1350 ) = 1200; 1500 - ( 1800 - 1500 ) = 1200

Silver similarly offers a target of $16/ounce*.

Silver

* Target calculation: 26 - ( 36 - 26 ) = 16

Dollar Index

The Dollar Index respected its primary trendline at 80.50 and is headed for another test of 84. The 13-week Twiggs Momentum trough above zero suggests a strengthening up-trend. Target for a breakout would be the 2010 high at 89*.

Dollar Index

* Target calculation: 84 + ( 84 - 79 ) = 89

Crude Oil

Crude is range-bound, with Nymex WTI retreating after a false break above resistance at $98/barrel and Brent testing support at $100. The spread has narrowed to $6 and is likely to close further as the US economy recovers faster than Europe. Brent is in a down-trend, while Nymex continues to threaten a primary up-trend, reflecting the stronger US economy.

Crude Oil

Commodities

The Dow Jones/UBS Commodity Index is falling hard, more in sympathy with gold than with crude, as the dollar strengthens. A rapidly weakening Chinese economy is likely to drag commodity prices even lower. Breakout below long-term support at 125/126 would offer a target of the 2009 low at 100*.

Dow Jones-UBS Commodity Index

* Target calculation: 125 - ( 150 - 125 ) = 100



If this Government cannot get the adjustment, get manufacturing going again, and keep moderate wage outcomes and a sensible economic policy, then Australia is basically done for. We will end up being a third rate economy.... a banana republic.

~ Former Australian Prime Minister Paul Keating (1986)

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