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25th january Gold Trend Analysis

Last nights update listed Gold resistance at 1672-1682 and the high so far is 1670. Support was listed at 1644-1654 and the low so far is 1649.

TRADES

No position in gold (Sold yesterday at 1669) – will look for a set up after the FED meeting.

Silver Long 1 contract at 31.57 basis March — (from website update last night) — I’m SELLING IT HERE AT 32.20 as of 11:05 am EST New York time. Will look for a set up after the FED meeting. (trend is still up — just taking profits)

CME NEWS

London Gold Fix $1,659.00 -$10.00

With a sharply lower opening slide in February gold this morning, the bears probably feels like they have the edge. The gold market is seeing some modest selling pressure from a weaker euro and generally weaker global equity market action. Some players think that the gold market will eventually garner some fresh support from Fed commentary today which is largely expected to remain supportive of the economy, because of ongoing high unemployment and also because of fears of knock on slowing from the Euro zone.

The Asian gold trade noted some jewelry buying overnight, which might suggest that some players see some developing value in gold after a modest correction of almost $29 an oz from this week’s highs! On the other hand, the potential for muted inflation forecasts from individual Fed members later today could be something that provides some gold bears with an excuse to pressure gold prices later on.

Overnight the IMF raised December gold reservs at 6 countries and reduced December gold reserve holdings at 3 countries.

European equity markets were generally weaker this morning, while many Asian markets remain closed due to the Chinese New Year.

The markets saw weak UK GDP readings overnight and that might have contributed to fresh concerns of global slowing off residual problems in the Euro zone. However, the European markets were still concerned with the lack of forward progress on the Greek debt negotiations but they weren’t overly interested in the fact that German business sentiment rose for the 3rd straight month!

Today the markets are looking ahead to the end of a two day US FOMC meeting, with the Fed taking the added step of releasing individual Fed member interest rate forecasts today. The US trade saw a Pending Home sales report that was lower. There will also be an auction of $35 billion in 5 Year US notes at mid session today. The US Dollar has started out stronger against the euro, although the Euro showed some bounce in the wake of the positive German business sentiment figures.

The tone into the close today is likely to be dominated by the Fed’s new interest rate forecast effort.

Going to the Chart

Gold has pulled back to our lower range listed last night on the web and the first probe down has held above last weeks low, and has bounced back up to the 1657 area. The pullback is normal as we go into this Fed meeting. The meeting is supposed to be much more information based, so it will be interesting to see how the markets react to MORE info. (As if we don’t have enough already). Prices are likely to stay range bound as we move to the meeting. The Minutes will be released at 12:30 PM New York time.

Note on the chart how yesterday’s gold trade was below the Gann line that we had supported all year. When last nights high was not able to move back above the line, prices dropped and so far has dropped just below the first support on the chart where the yellow area of 1655-1662 Fib 50% retrace number was. With last weeks low at the 1642 area, it still leaves gold with a higher low then last week. Resistance for the rest of the day is the 1661-1671 area and support is the 1641-1645 area. The stage is set and now everything will depend on the FOMC meeting. With options expiration tomorrow – the ‘control boyz’ have price just where they want to at 1650. This is the number that GoldTrends Info Specialist Bob Israel had reported on over the past week where the highest open interest for the Feb contract was concentrated and where it was to their advantage to see the price close at. Now that the expiration is here, prices will return to their own and pressure from the expiration will end.

We took profits yesterday in our longs — and last night, we decided to remove the 1651 buy as we opted for a silver buy order instead. In other words, I did not want to go long BOTH gold and silver before the Fed meeting. However, the other reason is that a short term peak is due in the markets and I was hesitant to reload in front of a fed meeting. We should get our obligatory spike today and then the metals will more than likely start the next trend direction which is due to last two weeks. Gold is going to have to close above 1663-1666 in order to favor higher prices. For now, we’ll wait until after the meeting and announcements and look for a set up. It is possible we have seen the highs for the week, but it is also possible that the metals could be revived depending on the FOMC notes. In summary, the uptrend is still in place, but the drop below the Gann line has gold pulling back to first support levels. A close below last weeks 1642 area should prompt a test of 1625-1635. If we see a set up we’ll email. We suspect the Fed will accomodate the markets and will remain loose with policy. Based on the moves today, we will look for a set up.

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."