Gold and commodities fall as the dollar rises

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

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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)