Gold tests key support as the dollar rises
By Colin Twiggs
November 13th, 2013 8:30 p.m. EDT (12:30 a:m AEDT)
The yield on ten-year Treasury Notes rallied off support at 2.50 percent. Follow-through above 2.75 would indicate a fresh primary advance, with a target of 3.50 percent*. A 13-week Twiggs Momentum trough above zero would strengthen the signal. Respect of resistance is unlikely, but would warn of another test of 2.50.
* Target calculation: 3.00 + ( 3.00 - 2.50 ) = 3.50
Rising interest rates would strengthen the dollar. The Dollar Index respected support at 79, suggesting a rally to resistance at 84. Breach of the rising trendline, however, still warns of trend weakness, and 13-week Twiggs Momentum respect of the zero line (from below) would strengthen the warning.
* Target calculation: 79 - ( 84 - 79 ) = 74
Rising interest rates and a stronger dollar would weaken gold. Spot gold is testing primary support at $1250/ounce. A 13-week Twiggs Momentum peak below zero warns of a primary down-trend; breach of $1250 would strengthen the signal, while follow-through below the June low of $1200 would confirm. Respect of support at $1250 is less likely, but would indicate another test of $1350.
* Target calculation: 1250 - ( 1350 - 1250 ) = 1150
Silver is similarly testing support at $20.50/ounce. Breach would signal a decline to $18/ounce. Completion of a 13-week Twiggs Momentum peak below zero would warn of a primary down-trend.
Nymex crude is undergoing a strong correction. 13-Week Twiggs Momentum crossing to below zero warns of reversal to a primary down-trend. Breach of primary support at $86/barrel would confirm. Until then, however, Nymex remains in a primary up-trend. Diverging Brent crude reflects both a strengthening European recovery and continued supply threats in the Middle East.
China is a primary driver of commodity prices and a weakening Shanghai Composite Index is driving commodity prices lower. Dow Jones-UBS Commodity Index broke primary support at 124, offering a target of 114*. A 13-week Twiggs Momentum peak below zero also suggests a continuing down-trend.
* Target calculation: 124 - ( 134 - 124 ) = 114
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