Gold eases as bond yields rise

By Colin Twiggs
September 18th, 2013 3:30 a.m. EDT (5:30 p:m AET)

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Spot gold encountered short-term support at $1300/ounce, but the correction is far from over. A rally would be likely to encounter resistance at $1350, while failure would test $1275. Respect of $1275 would be bullish, but the primary trend is downward and another test of support at $1200 remains likely. Declining 13-week Twiggs Momentum, while below zero, strengthens the signal.

Spot Gold

Rising Treasury yields increase the opportunity cost of holding precious metals, driving gold prices down. The yield on ten-year notes is testing support at 2.70 percent, but respect is likely, offering a medium-term target of 3.30 percent.

10-Year Treasury Yields

* Target calculation: 3.00 + ( 3.00 - 2.70 ) = 3.30

Crude Oil

Nymex and Brent crude are easing as prospect of US intervention in Syria fades. Breach of support at $103/barrel — and the rising trendline — is unlikely, but would test medium-term support at $98/barrel.

Brent Crude and Nymex Crude

* Target calculation: 108 + ( 108 - 98 ) = 118

Commodities

A retreating Shanghai Composite Index followed commodity prices lower, with another test of primary support at 124 by Dow Jones-UBS Commodity Index more likely. 13-Week Twiggs Momentum below zero continues to indicate a (primary) down-trend and another peak below the line would strengthen the signal. Recovery above 130, however, would confirm the earlier double-bottom reversal and a primary up-trend.

Dow Jones UBS Commodities Index

* Target calculation: 130 + ( 130 - 125 ) = 135



Luck plays an enormous role in trading success. Some people were lucky enough to be born smart, while others were even smarter and got born lucky.

~ Ed Seykota

Colin Twiggs

Author: Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.

He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.