Gold and commodities wait on the dollar

Thursday, October 11, 2012

Gold and commodities wait on the dollar

Sydney, Oct. 11, stock trade .- The Dollar Index rally recovered and is headed for a test of resistance at 81.00/81.50. Respect of resistance would confirm the primary down-trend. Reversal of 63-day Twiggs Momentum below zero also signals a primary down-trend; a peak below zero would strengthen the signal.

* Target calculation: 81 – ( 84 – 81 ) = 78

Gold and commodities await clear direction from the dollar which, in turn, is dependent on the inflation outlook. Spot Gold encountered strong resistance at $1800 per ounce*. A 63-day Twiggs Momentum trough above zero would signal a primary up-trend, while breakout above $1800 would confirm. Reversal below $1740 is unlikely but would warn of another correction.

* Target calculation: 1650 + ( 1650 – 1500 ) = 1800

The RJ-CRB Commodities Index has been de-listed so I am now using the DJ-UBS Commodity Index, which retraced to test support at 145/146. Respect would indicate another test of resistance at 150/152 — as suggested by recovery of 63-day Twiggs Momentum above zero — while failure would warn of another test of primary support at 125.

Brent Crude rallied off support at $108 per barrel and is headed for another test of $117. Breakout would advance to the 2012 high of $125/$126. The small 63-day Twiggs Momentum trough above zero suggests a primary up-trend.

* Target calculation: 117 + ( 117 – 108 ) = 126

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