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1st september Gold Trend Analysis

Gold has beein in a tight trading range for the past few days and Thursday’s action is about the same —- and the spot range is 1815-1830 so far. Currently down 10 dollars at 1820 and silver down 40 cents at

Trades

Long 1 Mini Dec Gold at 1793 —- current stop 1803 intra day
Long 1 Mini Dec Silver at 40.80 — cancel order to add another contract at 39.65 — and raise stop from 39.39 intra day to 39.90 intra day.

CME NEWS

London Gold Fix $1,815.50 -$9.50

With a flurry of US economic numbers expected over the coming two trading sessions, the market might be expected to come to a more definitive position on the direction of the US economy. Most of the hard data we’re seeing is from July — when things were stronger — and the softer data suggests we are weakening. Since equities have been propped up for the last three years, if things turn worse, the fed will most likely provide liquidity. That’s the consensus anyway.

Some traders suggest that the consolidation pattern this week in gold is correcting and balancing the technical position on the gold charts, while others suggest that action hints at a loss of bullish momentum. The bulls might be cheered on by news of very strong American Eagle Gold Coin sales for the month of August, especially with a European bank overnight predicting that gold prices could rise to $2,000. Surprisingly gold prices have not embraced inflationary data from China and comments from Chinese officials that battling inflation will remain the primary target of the PBOC for the rest of this year. However, the gold market probably sees the direction of the US economy as the most dominating influence on gold prices directly ahead. Clearly gold has been feeding higher off macro economic uncertainty and therefore the gold bulls will be on the look-out for data that fosters fear and hopes of additional easing from the Fed. In the end, gold will most likely be waiting for the Jobs data due tomorrow before any sustained upside should be favored. Trading is winding down and will be very light tomorrow as the USA markets will be closed on MONDAY.

We have a mixed bag right now as the short term weaker trends are due to be in effect in gold from now until mid month September — but to counter that — September is the strongest seasonal month for gold and silver. Last year did not see the weaker trend affect September — as it was straight up.

Other News

While equity markets in Asia were mixed during overnight trading, stock indices Europe are generally weaker this morning. US equity markets are higher. The US Dollar is stronger against most of the major currencies this morning, although posting a loss versus the Swiss Franc. Brazil cut their benchmark interest rates late Wednesday by 0.50%. Spain auctioned 3.6 billion worth of bonds this morning, with weaker demand and higher yields. Chinese “Official” PMI during August was 50.9, roughly in-line with market estimates. German GDP during the second quarter was up 0.1%, lower than market expectations. A survey of Euro zone business sentiment was 49.0, lower than forecasts. A survey of German business sentiment was 50.9, also lower than expectations. Major US economic numbers released this morning include Weekly Jobless Claims and Non-Farm Productivity, and it remained right around the 400K level, basically neutral —- US Business Sentiment came in at 50.6% –down from 50(%– and July Construction Spending down .2% , — new orders 49.6 — and production 48.6%– Inventories rose — -and surveys of auto sales and chain store sales will also be released during the session.

Going to the chart

Gold refuses to move above the 61% retrace of last weeks drop at 1833. The potential for gold to roll over here and trade down to the 1809 or even 1782 area is gaining potential. Perhaps the most interesting aspect is that note how the adaptive moving averages were below price during the big up move in July/August — and since the drop last week — price is stalling out below them. While this does not confirm lower prices —- it is a warning to be on guard and the potential to move lower on the short term has greater potential. IF you longed at 1793 — we suggested taking 1/2 off the table at the 1830 area —– and one could close the rest of the position — or use a stop at 1803 intra day. I’m going to use the stop at 1803.

In summary — one can make a case for either side of the short term. Weekly support is the lower dotted line at 1750-1760 area ———- next daily support is 1809 and 1783. On the upside the 1833 – 1836 is obviously the key price resistance. MARKETS ARE CLOSED ON MONDAY IN USA.