Gold and commodities rising

By Colin Twiggs
February 7th, 2013 3:00 a.m. ET (7:00 p:m AET)

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Gold is forming a base between $1650 and $1700/ounce on the daily chart. Upward breakout would offer an initial target of $1750/ounce. Oscillation of 63-day Twiggs Momentum close to the zero line indicates consolidation but beware of a peak below zero — or reversal below $1650 on the spot chart — which would warn of another down-swing.

* Target calculation: 1700 + ( 1700 - 1650 ) = 1750

Silver displays a similar long-term pattern to gold, albeit with a sharper spike in 2011. Bullish divergence on 63-day Twiggs Momentum suggests an up-trend. Breakout above $35/ounce ($1800 in the case of gold) would signal a long-term advance.

Brent and Nymex crude both threaten an upward breakout from their recent consolidation — which would signal a primary advance to their 2012 highs.

Commodity prices are also improving, with Dow Jones-UBS Commodity index displaying a bullish divergence on 63-day Twiggs Momentum. Breakout above 150 would complete an inverted head and shoulders reversal with a target of 175. Rising commodities — other than gold and oil where other factors need to be considered — would suggest a recovering global economy and further gains for stocks in the year ahead.

To win one hundred victories in one hundred battles is not the acme of skill. To subdue the enemy without fighting is the acme of skill.

~ Sun Tzu: The Art of War