* Target calculation: 81 - ( 84 - 81 ) = 78
Spot Gold continues to test 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.
* Target calculation: 1650 + ( 1650 - 1500 ) = 1800
Rising gold prices indicate increased inflation expectations. The spread
between 10-year Treasury yields and the equivalent TIPS (Treasury Inflation
Protected Securities) yield also spiked up after the latest QE announcement but
then retreated. The inflation effect of quantitative easing by the Fed is
likely to be muted by deflationary pressures from private debt contraction —
and a slow-down in government debt expansion after November (no matter who wins
the election) — working in the opposite direction. I believe the Fed goal is to
manufacture a soft landing rather than to generate inflation, which would go
against their mandate.
Commodities: The RJ/CRB Commodities index has been delisted by ICE Futures US (formerly NYBOT). See below for details.
The equivalent DJ-UBS Commodity Index is testing resistance at 150/155. Respect would warn of another test of primary support at 125, but also that inflation expectations remain muted.
Brent Crude is correcting despite the rise in inflation expectations, reflecting slowing economic activity rather than improved security. Follow-through below $108 per barrel would indicate a correction to $100, while reversal of 63-day Twiggs Momentum below zero would suggest a primary down-trend.
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