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Gold has traded between $1,206 and $1,225 so far today, reversing with the decline in equities driven in part by reports that Russia is considering a measure that would allow its courts to seize foreign assets – a long-held fear of investors…as of 8:30 am Pacific, bullion is now up $1 an ounce at $1,218…Silver has retreated 19 cents at $17.49…Copper is off 3 cents to $3.05…Crude Oil is unchanged at $92.83 while the surging U.S. Dollar Index, continuing its record run, shot up to about 85.50 this morning but has since pulled back to 85.30 for a gain of one-fifth of a point…the Dollar Index is gunning for an incredible 11th straight weekly advance (see updated chart below) and although it’s already in overbought territory, a confirmed breakout above critical 85 resistance would attract even more momentum traders…it’s possible we may have seen a short-term “top” this morning but we’ll just have to wait and let the market tell us what direction it wants to go…

Gold demand in India is picking up ahead of the “Festival of Lights” (Diwali) on the 23rd of October…reports say that importers are shipping in Gold through official routes estimated to reach 80 tonnes this month, ahead of retail demand and at what they consider cheap prices…it has also been reported that 50 tonnes of Gold were smuggled this month over a 10-day period across the Indian borders…the Indian marriage season starts in November and lasts through to May next year…what also may help Indian Gold demand is that the monsoon season turned out to be better than expected for farmers, creating a good harvest…Indian farmers are sizable Gold buyers…watch for Indian as well as Chinese demand to increase further in the event Gold dips below $1,200 an ounce…

Yet another opinion on Gold – Citi Research has trimmed its price forecasts for most precious metals, describing itself as most upbeat on palladium…Gold, according to Citi, is expected to be under pressure in the fourth quarter, but by 2016 they see the average price rising again.  “We downgrade our near-to medium-term Gold price assumptions, marking-to-market the current spot environment,” Citi said in one of several research reports on the metals released today…Citi’s 2014 average forecast was revised to $1,275 an ounce from $1,300 previously, while the 2015 forecast was trimmed to $1,225 from $1,365…the 2016 forecast is now listed at $1,300, compared to $1,380 previously…

U.S. Dollar Index Update

The greenback has soared in recent weeks as a strengthening U.S. economy has prompted investors to wonder if the Federal Reserve will raise interest rates sooner than expected…the dollar climbed to a nearly 6-year high against the Yen today while gains against the euro were even sharper, with the common currency sinking to its weakest level (just below $1.27) since November 2012…the appreciating value of the dollar on the world foreign exchange markets has been a significantly bearish development for many raw commodities, one of the main factors in the sharp declines this month in both Gold and the Venture…this big divergence between U.S. and European monetary policy is not likely to end anytime soon, though the Dollar Index is clearly in overbought territory and at some point in the near future (immediately or fairly soon) will need to correct significantly in order to cleanse its current overbought conditions…

Analysts and traders pointed to Tuesday’s weak euro zone business activity data, coupled with further dovish comments from ECB President Mario Draghi, as fresh catalysts for the Dollar Index which is threatening to overcome critical resistance around 85…Draghi yesterday repeated that the ECB is open to using further unconventional policy measures to head off the threat of perilously low inflation…

Yesterday’s close above the 85 point level may have been a “false” breakout or a “bull trap”, so we have to be careful here…where the Index closes tomorrow will be critical…

Today’s Equity Markets

Asia

China’s Shanghai Composite was up slightly overnight…reports overnight that Chinese President Xi Jinping is considering replacing the head of the central bank has sparked expectations among some traders for looser monetary policy in the world’s second-largest economy…meanwhile, Japan’s Nikkei average climbed over 200 points to close at a new 7-year high of 16374…

Europe

European markets were down sharply today…

North America

The Dow has plunged nearly 200 points as of 8:30 am Pacific…the number of Americans filing new claims for unemployment benefits rose less than expected last week, suggesting an acceleration in job growth in September…meanwhile, the Commerce Department said durable goods orders, items ranging from toasters to aircraft that are meant to last three years or more, dropped 18.2%…that was in line with expectations (it partially reversed July’s aircraft-driven 22.5% surge) but represented the largest decline since the series started in 1992…

The TSX is 168 points lower as of 8:30 am Pacific while the Venture has fallen 8 points to 916…a very important support band for the Venture is between 915 and 920, so the balance of this week is going to be critical in terms of a potential reversal or a further breakdown…keep in mind that today is also month-end and quarter-end “settlement” which can often contribute to added selling…RSI(14) on the daily Venture chart is already at its most oversold point since the spring of last year when Gold collapsed to just below $1,200 an ounce…

Calibre Mining Corp. (CXB, TSX-V) Update

Calibre Mining (CXB, TSX-V) pushed higher yesterday after reporting the second set of assays from ongoing drilling at its Eastern Borosi Gold-Silver project which is being financed under an option agreement with Iamgold Corp. (IMG, TSX)…22 of 30 planned Phase 1 drill holes have now been completed with assays received for 12 of them…yesterday’s new high-grade intercepts results included 6.50 m grading 16.88 g/t Au and 20.95 g/t Ag in GP14-010 (within that interval, 1.82 m grading 45.79 g/t Au and 32.39 g/t Ag)…that was the first-ever drill hole on the Vancouver Gold-Silver vein system located 250 m southeast of the high-grade Gold discovery on the Guapinol structure…

Technically, we became very bullish on CXB when it broke out above a 2-year downtrend channel in June…CXB is now up against the chart resistance that John outlined earlier at 15 cents while RSI(14) is in overbought territory at 78%…

CXB is unchanged at 14 cents through the first 2 hours of trading…

Pine Cliff Energy Ltd. (PNE, TSX-V) Update

Interesting chart – with but one brief exception, Pine Cliff Energy (PNE, TSX-V) has remained within the parameters of an upsloping channel over the past 2 years with its 200-day moving average (SMA) providing tremendous support as you can see below…

This is a company that has been growing by strategic acquisitions, and earlier this week PNE reported that it had closed a $60 million prospectus offering of 29.3 million shares at a price of $2.05 per share…in late August, the company announced that it had entered into a binding agreement to acquire certain shallow natural gas assets in Alberta and Southern Saskatchewan from a senior oil and gas producer for cash consideration of $100-million…

PNE is down 4 cents at $1.71 – 21 cents above its 200-day – as of 8:30 am Pacific…technically, the bullish trend is showing some weakness at the moment and another test of the 200-day could be in the cards…as always, perform your own due diligence…

Alabama Graphite Corp. (ALP, TSX-V)

We’ve had some readers request this  – Alabama Graphite (ALP, TSX-V), which came out with news yesterday, has been a strong performer this year as it advances two flagship projects in the heart of a past producing region in Alabama…as always, perform your own due diligence…

Technically, the overall bullish trend here is quite powerful with strong support in the mid-20’s and a band of resistance between 29.5 cents and the March high (not shown on this 5-month daily chart) of 31.5 cents…from a long-term perspective, ALP has overcome resistance at its 1000-day moving average (SMA) which is very encouraging looking ahead into 2015…

ALP is off half a penny at 27.5 cents as of 8:30 am Pacific…

Note:  John, Terry and Jon do not hold share positions in CXB, PNE or ALP.