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14th October Gold Trend Analysis

In last nights website update resistance was listed at 1669-1678 and the high so far today is 1683. Support was listed at 1642-1652 and the low so far is 1661

Trades — I’ve not positions coming into this morning. Silver trade was closed last night.

IF you shorted the 1680 area again in gold —take 1/2 profits here near1673 —-and place stop at breakeven on the remainder. Consider Covering positions if it looks as if gold will close above 1680. If your looking to get long — the 1670 and 1663 area in Dec gold is a consideration.

I just took a position and i am long on DEC emini gold at 1672 — look to buy at 1675 or better —- and I have an order to long another mini at 1663 —- both basis december. Stop is currently 1636 — but will raise stop as soon as possible. The G20 meeting poses a huge risk to be long as any decisions can have big reprecusssions. Depending on the action — will depend on how long i hold this position. This can still go either way………….so the RISK IS VERY HIGH. First target will be 1720 —-but this is a risky play. IF WE GET AN AFTERNOON SELL OFF — things will not look as rosy —-and depending on what G20 says will depend on the gold situation coming into Monday. BE CAREFUL. Like I said — i may not hold this long depending on the action.

CME NEWS

London Gold Fix $1,676.00 +$20.00

Gold is apparently seeing renewed investor interest after the steep declines last month. There are some reports that gold ETF holdings have increased 8.7 metric tons this week following a decline of 17 metric tons last month. Central Bank buying has also been noted. It seems that once concern over the EU debt crisis subsides and the leaders of Europe start to discuss ways to deal with it, any solution, be it haircuts on Greek bonds and/or bank recapitalization, likely means liquidity injections that would ultimately prove inflationary. This enhances gold’s attractiveness as a safe haven for the long-run.

Last night’s report that downgraded Spain’s debt slightly seems to have been met with a shrug, possibly because so much bad news has been absorbed by the market already, including suggestions that banks may have to accept as much as a 60% “haircut” on Greek bonds.

Gold prices in India were somewhat higher overnight. They have been choppy this week, but demand is expected to pick up later this month with the approach of two festivals and the wedding seasn. A major international bank has noted that gold sales in India are up 10% so far this year.

US equity markets are open with another 100 point gain today as the shorts keep getting pummeled– will it follow thru to te close ?? The US Dollar is slightly weaker against most of the majors, although posting a gain versus the Yen. G20 Finance Ministers will have a 2-day meeting in Paris starting today. Japanese Corporate Goods were up 2.5% year-on-year, in line with expectations. Chinese CPI during September was up 6.1% year-on-year, in line with forecasts. Chinese PPI during September was up 6.5% year-on-year, lower than market projections. Euro zone Inflation during September was up 3.0% year-on-year, in line with market expectations. Major US economic numbers released this morning were September Retail Sales up 1.1% (highest since last February) –and September Import & Export Prices up 13% YOY,US Consumer Sentiment came in at 57.5 vs expected 60, and August Business Inventories were slightly higher but below expectations. So now the US economists are flip flopping and questioning (again) whether there will be NO RECESSION. IT has become a laughable exercise. The world situation has not changed and is intensifying as Syria is almost in civil war and now IRAN and US situation is escalating. Just what USA needs, another warfront.

Going to the Charts

Gold has been teasing now for the last two weeks at the 1630-1685 area remaining in a sideways trend all week. Each rise is met with a drop and each drop is met with a rise. Coming into the Friday close leaves gold in a can go either way next week. We have conflicting evidence. It seems the RISK on trade is ON again — Stock market is ready for its 3rd weekly gain and is up another 5% this week —IBM making new all time highs —-and earnings come out on Monday. They have had 25 straight quarters with gains. The gold chart shows that gold has moved above the downtrend line on a short term basis and it comes down to whether Friday sells off in lieu of the G20 meeting this weekend. We don’t see how the G20 can do anything else but support — which means more liquidity.

With gold hanging around this 1670-1680 the potential for upside action and a move to the 1720 area seems to have a slight advantage. The chart has a wedge which favors lower —- but not always. And since its so obvious on the chart, it makes me wonder whether the chart is just painted and that the outcome will be a push higher towards 1720 first ? THE G20 MEETING WILL OBVIOUSLY be watched carefully —and depending on the outcome will probably set the pace for next weeks price activity. I don’t like being long over the weekend with the G20 meeting. However, If gold rallies later today — I might take a position near the close on Globex. I WILL EMAIL if I make a move. G20 rumor’s are already coming out —- write down’s of 50% in Greek debt — and providing a backstop for liquidity for euro banks. All idea’s are being put on the table. This should set the pace for the action next week. It could make gold open much higher — or lower on Sunday night —- as there is no way to gauge the outcome.

Last nights website update showed 1687 as a key fibonacci retrace number —so even though we’ve been using a close above 1680 as a guide — the 1687 number is also an important number on a closing basis today.