Gold tests key support as the dollar rises

By Colin Twiggs
November 13th, 2013 8:30 p.m. EDT (12:30 a:m AEDT)

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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.

10-Year Treasury Yields

* Target calculation: 3.00 + ( 3.00 - 2.50 ) = 3.50

Dollar Index

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.

Dollar Index

* 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.

Spot Gold

* 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.

Spot Silver

Crude Oil

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.

Brent Crude and Nymex Crude

Commodity Prices

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.

Dow Jones UBS Commodities Index

* Target calculation: 124 - ( 134 - 124 ) = 114

In liberal logic, if life is unfair then the answer is to turn more tax money over to politicians, to spend in ways that will increase their chances of getting reelected.

~ Thomas Sowell