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19th december Gold Trend Analysis

Last nights website update listed resistance at 1606-1616 and the high is 1608.50 spot gold — support was listed at 1582-1585 and the low so far today is 1583 spot gold.

Trades

Long Gold at 1612 basis Feb (Average) (Trade orders the same as listed on website last night)

London Gold Fix $1,593.00 +$3.50

CME NEWS

There was some initial pressure from news of the death of the North Korean President over the weekend in markets. Gold recently has come under pressure from events that could add to the prospect of a return to global recession — (At least that’s the story being floated. A STOPPING OF PRINTING is the only thing that gold gets concerned over or a dash for money – Bill’s comment).

It is possible that gold has bounced in the wake of a slightly upbeat tilt toward the Euro zone situation, as there are hopes that the IMF is poised to make bi-lateral loans to EU members. It is also possible that gold and other commodity markets are still drafting support off news from last week of Non EU members pledging fresh capital to the IMF.

Gold was at least partially undermined overnight by news of a Fitch downgrade warning for France and potentially six other countries and by talk of slack Indian gold demand. In looking forward the gold bulls probably need to see positive equity market action and ongoing positive dialogue from the Euro zone situation just to sustain a recent developing pattern of higher highs on the daily charts. Equity markets in Asia were mixed today, with the North Korea news undermining some markets. Stocks in Europe showed some minor strength to start the Monday trade. US markets are open and are roughly unchanged so far today. The US Dollar was slightly weaker against most of the majors to start this morning, but it was initially stronger in the wake of the death of the North Korean leader. In the overnight action, the markets saw signs a Euro zone current account deficit reading and suggestions from the Bundesbank, that the US wasn’t likely to increase its stake in the IMF.

Going to the chart

As reported on the website last night, gold is bouncing from the lows of last week. We don’t think its a new uptrend on both the short and medium term. At least not yet. We still favor another pullback after this bounce, and it is there whether we will see if the market forges new lows or whether we support above last week’s lows. The short term cycle turn is getting closer as the due date for a short term turn is Dec 24th (plus or minus 72 hours). So on average, we still have a bit of short term weakness to deal with if the short term trends play out as expected. Our best take at the moment then is a peak in the next 48 hours of this bounce and low to develop some time early next week on the short term. Resistance remains the 1607-1616 area where the 23% retrace at 1607 and the 200 day average at the 1616 zone (Spot prices). Support is the same as listed last night (1582-1585). In summary, price is in a bounce mode and has not displayed much power. The slope of the hourly also suggests this is just a bounce. The pivot point seems to be the 1607-1610 area in spot. In summary, we expect one more pullback to test support once this bounce is over. With holidays coming, trading projections will become more and more difficult. I REMAIN CAUTIOUS — and tempted to just stand aside of short term trade. Look for 1607-1610 to probably be the high today. Watch 1582-1585 as support. IF we close below 1582, it will be suggestive that the bounce is already over.