Gold rallies as dollar weakens

By Colin Twiggs
February 2nd, 2012 5:00 a.m. ET (9:00 p:m AET)

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Spot gold is headed for a test of resistance at $1800 after breaching the descending trendline on the weekly chart, indicating that a bottom is forming. Breakout above $1800 would complete a double bottom reversal, with a target of $2100*. Respect of $1800 remains as likely, however, and would indicate another test of primary support at $1500.

* Target calculations: 1800 + ( 1800 - 1500 ) = 2100

The Dollar Index is weakening in anticipation of QE3 ahead of the November 2012 elections. The primary trend remains upward, though breach of the rising trendline, and/or reversal of 63-day Twiggs Momentum below zero, would warn that a top is forming.

* Target calculations: 80 + ( 80 - 75 ) = 85

Reality is the leading cause of stress
among those in touch with it.

~ Lily Tomlin