Gold: The Putin factor

By Colin Twiggs
March 18th, 2013 2:30 a.m. EDT (5:30 p:m AEDT)

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Spot gold is normally a reliable indicator of inflation expectations, but rising tensions over Ukraine and Crimea are likely to increase demand for gold as a safe haven. The yellow metal broke through resistance at $1350/ounce but is retracing to test the new support level. Respect of the rising trendline would confirm an advance to $1420. Crossover of 13-week Twiggs Momentum above zero (and earlier bullish divergence) signals a primary up-trend. Breakout above $1420 still appears some way off, but would offer a target of $1600/ounce*.

* Target calculation: 1400 + ( 1400 - 1200 ) = 1600

Interest Rates and the Dollar

Treasury yields are easing, with the yield on ten-year Treasury Notes again testing support at 2.60 percent. Consolidation between 2.60 and 2.80 percent would be a bearish formation. Breakout above 2.80 would indicate an advance to 3.50 percent*; confirmed if there is follow-through above 3.00 percent. But bearish divergence on 13-week Twiggs Momentum continues to warn of weakness and breach of primary support at 2.50 percent would signal a primary down-trend.

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

The Dollar Index is falling, in line with softer Treasury yields. Breach of support at 79.00 would confirm a primary down-trend. A 13-week Twiggs Momentum peak below zero also suggests weakness.

* Target calculation: 79.0 - ( 81.5 - 79.0 ) = 76.5

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Colin Twiggs

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