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20th October Gold Trend Analysis

In last nights update initial resistance was listed at 1639-1649 and the high so far was 1644 spot gold. Initial support at 1615-1623 was broken and 2nd tier support was listed at 1583-1595 and the low so far today is 1607.

Trades — I have no short term leverage trades at the moment

CME NEWS

Kaddafi death being reported by ruling council of Libya reports — rebel fighters capture him in Sirte– details coming. EURO deal with France and Germany and weekend summmit remains major news to watch.

London Gold Fix $1,629.00 -22.00

The gold market forged a noted range down move overnight and that action would seem to be the result of dual fears of more global slowing and the Euro debt zone situation. News of profits at African Barrick overnight might be seen as a negative, but recently gold hasn’t paid that much attention to the potential ebb and flow of supply levels. It does seem as if gold is fearful of a further break down in the Euro zone EFSF negotiations and that would seem to suggest that gold is still largely attempting to track its commodity market fundamentals and the liquidity fear that would come in without a decision this weekend by France and Germany.

After a long string of strong monthly US gold coin sales readings, talk that coin sales for October might be slowing a touch, should be seen as a little surprising considering that December gold this morning enters the US trade sitting roughly $300 an oz below the September highs. In other words, instead of seeing gold coins as a buy, some coin buyers seem to be put off by the fear that gold prices might continue to slide lower and are waiting over the last few days. This news seemed counter to what the US mint has reported as of late.

In the end, the gold bulls seem to need positive macro economic developments to avoid even lower gold prices ahead and it would also seem like the gold bulls need favorable EFSF news from Europe. In other words, some of the surprisingly strong US data today in Manufacturing might have given some gold support this morning near 1620 — BUT IT REMAINS TO BE SEEN IF IT WILL DO SO FOR THE REMAINDER OF THE DAY.

While equity markets in Asia and Europe were generally weaker during overnight trading, US equity markets are open with small gains. The US Dollar is generally unchanged against most of the major currencies this morning, although posting a small gain versus the Pound .Fed Governor Lockhart stated that the largest threat to the US economy comes from the current Euro zone debt problem. The Governor of the Bank of Japan said his nation’s economy continues to “pick up” but global economic growth is slowing. German PPI during September was up 5.5% year-on-year, roughly in-line with market forecasts. UK Retail Sales during September were up 0.6%, higher than market expectations. Major US economic numbers to be released this morning were the Philadelphia Fed business conditions index came in at a strong 8.7 —much higher than originally expected. Existing Home Sales during September down 3% — down more than estimates, and a Leading Indicators during September at came in at a slow 02%

Going to the chart

After a flash drop to 1607 on support break, gold has worked its way back to 1625 — a key pivot point and now the key area it needs to close above – as this area has turned to initial resistance. As we described on last nights web update, gold under 1650 favors lower. With this 1625 area as the key focus today at the 23% FIB retrace line, its no wonder we’re seeing a lot of trade at this price area. Resistance for the remainder of the day is 1629-1639 and support Is the 1583-1595 area. The 1618-1625 is important and seems where the majority of trade is occurring at the moment. In summary – bounces aside, the trend remains down in gold. This 1618-1624 area is important closing support for gold in spot price. Remain defensive and watch that 1618-1624 area today.
GREEK AUSTERITY VOTES are key today —-and watch the 11:30 AM EST EUROPEAN CLOSE TODAY.

FRANCAIS ESPANOL ITALIANO CHINESE

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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."