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22nd november Gold Trend Analysis

In last nights website gold update resistance was listed at 1687-1702 and the high so far today is 1704. Support was listed at 1662-1672 and the low so far today is 1667.

TRADES

Long gold from 1673 Spot Forex ( or 1674 Dec Gold)
Sold 1/2 at 1687 —- and holding half at the moment. INTRADAY STOP IS 1664

London Gold Fix $1,697.50

CME NEWS

At least to start today the gold market is encountering a partial risk on environment and a pullback so far in the US dollar has across the board gains in the metals complex. The gold market surprisingly is apparently cheered by news that the rating agencies won’t instantly cut the US rating, due to the super committee failure. In other words, gold is giving off signs of tracking its commodity market fundamentals.

While one can’t suggest at this hour that the markets are poised to fully shift into a risk-on environment, that potential might be increased as the DECEMBER OPTIONS EXPIRE TODAY…………and the “option boyz” will be returning the market to trade. The 1700-1706 area might be the cap — and it wouldn’t surprise me if we close not much higher than 1700. Thus we should expect some resistance near this area today.

At least to start today, yields on key Euro zone debt instruments were showing only minimal increases and that means residual concern toward the Euro zone remains in place but that focus might not be totally dominating today. The US GDP today was a second revision and the results were a drop of ½ %.

” Darth” pointed out that this could easily start rippling thru 4th quarter GDP estimates which are rediculously high as well and could carve a full one percent of current estimates for 4th quarter. Given that estimates are for 3% for the 1st Quarter reading… my guess for final would be something under 2 and maybe as low as 1 1/2%…. then look out in the first quarter.
As a further bit of news on Christmas sales, gift cards are not supposed to be such a big thing this year. That suggests post Christmas and January spending will fall below the last several years as well, putting more dead weight on the first quarter.

There will be a US Fed speech today and the release of the last Fed FOMC meeting minutes and therefore some gold bulls might be hopeful of some easing signals. It could also cap the market for the day but the fed is in no position to announce anything that would suggest tightning.

In other potential developments, there seems to be some disagreement between the US and Russia with respect to new sanctions on Iran and that could be positive for the gold trade if dialogue between Iran, Russia and the US intensifies. Another potential influence on gold prices today could be protests in Egypt, which are taking place just ahead of scheduled elections.

While equity markets in Asia were mixed during overnight trading, stock indices in Europe are generally higher this morning. There was talk overnight that the Chinese might have reduced requirements for 5 smaller Chinese banks and that could prompt some to suggest that China is indeed backing away from overt tight money policies. Spanish Yields did show a rise this morning, but the markets weren’t especially concerned about that news. The second leg of the Treasury’s refunding, the 5-Year Note auction, will have results announced at 1:00 PM EST. The Fed’s will release the minutes of the November 2nd FOMC meeting at 2:00 PM EST. With Unemployment high and financial market stress on the tipping point will set the stage for the Fed to favor an ease of policy.

Going to the chart

Gold’s bounce today should encounter resistance at the 1705 area as we approach first resistance at the TAN zone on the price chart. With the FOMC minutes out today at either 2pm or 2:15Pm est — we might see gold’s peak this morning and some backing and filling into the report. The chart shows that the Oct 31st low was breached this week and a lot of stops got cleared out. Since the Asian open, gold tracked higher into this resistance area and we’ve probably made the highs of the day. TODAY’s wildcard will be the FOMC minutes —- and that should provide more fodder for trade. Support for the remainder of the day is the 1680-1687 area. In summary — the correction hit it’s weekly support area’s and this bounce up is very typical. We’re not sure if the low’s are in —- but the “window” for our short term trend is due to bottom this week. The 1717-1727 area is where the most important resistance is at the moment.

FINALLY — the US THANKSGIVING schedule will have lower volume on Wednesday—closed Thursday—and light participation on Friday and that could make for abnormal trading conditions. THERE WILL BE NO INTRA DAY REPORTS ON THURSDAY — and there will only be on on FRIDAY if markets aremoving hard.