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10th May Gold Trend Analysis

In last nights website update resistance for today was listed at 1516-1522 and the high so far is 1519. Support was listed 1494-1504 and the low so far is 1505.

London Gold Fix $1,517.25 +$12.25

CME NEWS

In addition to reports of Indian gold buying overnight, the metals complex might be getting some ongoing lift from renewed inflation concerns in the wake of gains in a host of key commodity prices again overnight. It is also possible that the gold market is garnering some support from the start of the US political wrangling over its debt ceiling and spending situation.

While the gold market was presented with Import/Export prices in the US that were higher, that report didn’t have a major impact on gold prices, as the ebb and flow of inflationary pressures looks to be coming from the action in grains and energy prices. It is possible that gold is garnering some lift from the potential for Food price inflation in the wake of the US flooding and the cold and also because of the wet spring planting in North America. However, crude oil prices have fallen back this morning, perhaps in reaction to increased margins and therefore the inflation buzz isn’t totally universal in the early Tuesday trade. Apparently the gold market was largely unmoved by news of higher future gold production estimates from Newcrest Mining.

While equity markets in Asia were mixed during overnight trading, stock indices in Europe early were generally stronger earlier this morning. Early indications are for US equity markets to open today’s session with moderate gains. The Dollar is weaker against most of the major currencies during overnight trading, although posting gains versus the Yen and Swiss. Officials from Greece rejected news reports that nation was expecting a debt emergency package. The Chinese Trade surplus during April was $11.42 billion, much larger than expected. French Industrial Output during March was down 0.9%, weaker than expected. The first leg of the Treasury’s monthly refunding, the 3-year note auction, will have data announced at 1:00 PM EST. Major US economic numbers to be released this morning are April Import and Export Prices up 2.2%, March Wholesale Inventories rose at 1.1%. The overflow of the Mississippi is bringing shipping routes to a halt.

CNBC reports that Traders are speculating that the increase in margin requirements for commodities are an attempt to control prices and curtail inflation. The grains are up strong again today —- Crude has been on both sides of the trade and are near unchanged.

Going to the charts:

Today’s 8 hour view of gold shows a one year view. The lower dotted trend line is measured from the August and Feb lows and currently stands near the 1420 area. The upper dotted trend line is off of the May 2010, Nov 2010 and April 2011 highs and shows resistance in the 1575-1600 area. This mornings 1519 high got close to the 1522-1532 area, which is our second area for a potential high this week. Resistance is the 1522-1525 area for the remainder of today and support is at the 1499-1505 area. There have been a few attempts to bring price down below 1505 since yesterday — but it seems buying is coming in at that area today. Our best take is higher into mid week Wednesday in the 1522-1530 area as an ideal price area for the highs this week.

by Bill Downey

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Thoughts
"For a mountaineer, the important things are the effort, the posture and the muscles. The rope that holds him serves no purpose when everything works but it gives him a sense of security. In the same way, all gold does is ensure confidence; it's a safe haven."