Gold miners warn of weaker spot prices

By Colin Twiggs
December 19th, 2013 1:30 a.m. ET (5:30 p:m AEDT)

These extracts from my trading diary are for educational purposes. Any advice contained therein is provided for the general information of readers and does not have regard to any particular person's investment objectives, financial situation or needs and must not be construed as advice to buy, sell, hold or otherwise deal with any securities or other investments. Accordingly, no reader should act on the basis of any information contained therein without first having consulted a suitably qualified financial advisor. Full terms and conditions can be found at Terms of Use.


The Gold Bugs Index, often a leading indicator of spot prices, is headed for a test of the 2008 low at 150 after breaking support at 210. A 13-week Twiggs Momentum peak below zero suggests continuation of the primary down-trend.

Gold Bugs Index

The ASX Gold Index also signals another decline after breaking support at 2000. Retracement that respects the new resistance level would strengthen the signal.

ASX Gold Index

Spot gold has not yet broken support at $1200/ounce, but the metal is likely to follow the two miners indices. A 13-week Twiggs Momentum peak below zero would strengthen the signal. Breach of primary support would offer a target of $1000/ounce*.

Spot Gold

* Target calculation: 1200 - ( 1400 - 1200 ) = 1000

Dollar Index

Higher interest rates and a stronger dollar would increase downward pressure on gold.

The yield on ten-year Treasury Notes is headed for a test of 3.00 percent after breaking medium-term resistance at 2.75. Breakout would indicate a primary advance to 3.50 percent*. Reversal below the rising trendline is unlikely, but would warn of another test of 2.50. Higher yields are likely to strengthen the dollar.

10-Year Treasury Yields

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

The Dollar Index retraced to test medium-term resistance at 80.50. Breach of the declining trendline would suggest a rally to 81.50. Continuation of the decline is unlikely after Fed commencement of the taper and upward breakout above 81.50 would signal a primary advance. Recovery of 13-week Twiggs Momentum above zero would strengthen the signal.

Dollar Index

* Target calculation: 81.5 + ( 81.5 - 79 ) = 84

Think naught a trifle, though it small appear;
Small sands the mountain, moments made the year,
And trifles life.

~ Deward Young