GOLD

[setravis]

Gold

Spot gold broke through resistance at $920, marking the end of the two month correction, before retracing to test the new support level. Respect of support would confirm an advance to test primary resistance at $1000. Reversal below the rising (green) trendline is unlikely, but would warn of a failed signal and decline to primary support at $700 (confirmed if support at $870/$865 is penetrated).

[setravis]

Both gold and silver are nearing a resistance line and it looks like a strong selling point unless the US dollar lends a helping hand by continuing its decent.

Right now, keep your eyes fixed on the dollar. If it shows any signs of long term weakness, silver and gold will definitely benefit. But you will also have to take into account the resistance lines.


Gold $938.30

support at $900
resistance at $960

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Gold prices climb to 2-month high as dollar falls...

NEW YORK – Gold prices jumped Thursday, rising above $950 an ounce for the first time in two months, as the dollar lost more ground against other currencies.

The precious metal has moved steadily higher in recent weeks amid weakness in the dollar. Prices are up 6.7 percent for the month. Gold benefits from a falling dollar because investors use the yellow metal as a hedge against inflation and a weak currency.

On Wall Street, stocks sold off sharply on disappointing jobs data, which touched off fresh worries about the economy. The Dow Jones industrials plunged nearly 190 points in afternoon trading, while broader market indexes lost more than 2.3 percent.

The steep selloff in stocks spurred some safe-haven buying of gold.

Gold for June delivery jumped $13.80 to settle at $951.20 an ounce on the New York Mercantile Exchange. The last time the precious metal closed above $950 an ounce was March 23.

Other metals were mixed. July silver rose 16.5 cents to $14.4450 an ounce, while July copper futures slipped 5.55 cents to $2.0510 a pound.

Oil prices pulled back on the Nymex after jumping to a six-month high above $62 a barrel on Wednesday.

Light, sweet crude for June delivery fell 99 cents to settle at $61.05 a barrel. Gasoline futures dropped less than a penny to $1.7718 a gallon, while heating oil futures fell 0.88 cent to $1.5557 a gallon.

Grain prices were mixed on the Chicago Board of Trade.

July wheat futures fell 4.25 cents to $5.9350 a bushel, while corn for July delivery dipped 2 cents to $4.24 a bushel.

July soybeans rose 6 cents to $11.75 a bushel.

[setravis]

Gold Retraces...
Spot gold fell short of $1000, coinciding with a rally of the greenback — reflected on the US Dollar Index. The retracement is testing interim support at $940. Failure would warn of a down-swing to primary support at $870. Respect, however, would indicate another test of $1000. In the longer term, breakout above $1000, followed by confirmation of the new support level, would signal a primary advance. With a target of $1130 calculated as 1000 + ( 1000 - 870 ).

[setravis]

Gold
Spot gold confirmed its secondary reaction, respecting the new resistance level at $940. Expect a test of primary support at $870. In the longer term, failure of primary support would signal a test of the November 2008 low of $700; while respect of support would indicate another test of $1000.

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Gold...The Significance Of $920 For Gold

Spot gold is testing the lower border of the consolidation between $920 and $940. Narrow consolidation is a continuation pattern and a close below $920 [orange] would test primary support at $870. A close above $940 (or intra-day rise above $950) is unlikely, but would signal that the correction has ended. In the longer term, failure of primary support would test the November 2008 low of $700; while breakout above $1000 would offer a long-term target of $1300 — calculated as 1000 + ( 1000 - 700 ).

[setravis]

Gold miners tend to lead the actual gold price and the Gold Miners Index [GDX] is testing the lower border of its trend channel. Twiggs Money Flow (13-Week) bearish divergence warns of a downward breakout and subsequent secondary correction — which would be a negative sign for the spot metal price.

[setravis]

Gold
Spot gold broke through resistance at 950, but the tall shadow and weak close are unconvincing. Follow-through above $960 would confirm that the correction is over, while reversal below $940 would signal continuation — and a likely test of primary support at $865. In the long term, breakout above $1000 would signal a primary advance with a target of 1100, while failure of primary support at $865 would test the November 2008 low of $700.

Inflation fears are the main driver behind the gold price. Dennis Lockhart, president of the Atlanta Fed, yesterday reassured his audience that inflationary and deflationary risks are evenly balanced. He also pointed out that "the absolute size of the Fed's balance sheet is not as scary as it used to be." The Fed now pays interest on excess reserves held on behalf of banks and is able to control the flow of liquidity into the economy by varying this interest rate. The question remains: will they do the right thing — or bow to the inevitable political pressure?

[setravis]

Gold...
Gold is advancing towards $1260. Breakout above $1260 would offer a target of $1360*. Bearish divergence on 63-day Twiggs Momentum, however, warns of weakness and respect of resistance would indicate another test of primary support at $1160.
Target calculation: 1260 + ( 1260 - 1060 ) = 1360

[setravis]

Gold...
Gold Tests $1260

Gold is headed for another test of $1260; breakout would signal an advance to $1360*. Twiggs Momentum recovery above its declining trendline would indicate continuation of the primary up-trend. Respect of the trendline, however, would signal another test of support at $1160.

Target calculation: 1260 + ( 1260 - 1160 ) = 1360

[setravis]

Gold...

Gold is consolidating in a narrow band below resistance at $1260. Breakout is more likely and would signal an advance to $1360*, but reversal below the rising trendline would warn of another test of primary support at $1160. A 21-day Twiggs Momentum retracement that respects the zero line (from above) would confirm the primary up-trend; reversal below zero, however, would suggest a correction.

Target calculation: 1260 + ( 1260 - 1160 ) = 1360

[setravis]

Gold...

Gold broke through resistance at $1260 and is now retracing to test the new support level. Respect of $1260 would signal a primary advance to $1360. Reversal below $1240 is less likely, but would warn of a correction to primary support at $1160. Twiggs Momentum (21-day) retracement that respects the zero line (from above) would confirm the primary up-trend.

Target calculation: 1260 + ( 1260 - 1160 ) = 1360

[setravis]

Gold...
Gold broke is testing short-term resistance at $1300. Expect retracement to test the new support level at $1260. Respect would confirm a primary advance to $1360*. Failure of support is unlikely, but would warn of a bull trap. Twiggs Momentum (21-day) reversal below the rising trendline would signal a retracement; and respect of the zero line would confirm the up-trend.

Target calculation: 1260 + ( 1260 - 1160 ) = 1360

[setravis]

Gold...
Gold is testing short-term resistance at $1310. Reversal below the rising trendline on 21-day Twiggs Momentum Oscillator would signal retracement to test the new support level at $1260. Failure of support is unlikely and respect would confirm the primary advance to $1360*.

Target calculation: 1260 + ( 1260 - 1160 ) = 1360

[setravis]

Gold long-term view...
The recent surge in spot gold is attributable to the weakening dollar, but if one compares the Relative Strength of gold against the US Dollar Index it is clear that gold has been appreciating against the entire basket* of currencies since 2001. And the trend shows no signs of abatement.

The $DXY basket of currencies: Euro 57.6%, Japanese yen 13.6%, Pound sterling 11.9%, Canadian dollar 9.1%, Swedish krona 4.2%, and Swiss franc 3.6%.