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25th October Gold Trend Analysis

In last nights website update, resistance was listed at 1657-1667 and the high so far today is 1664 spot gold. Support was listed at 1634-1644 and the low so far today is 1652 spot gold.

Trades –

I have a buy order for Gold if it hits 1641 spot —– (will use Dec Mini contract) With a stop loss 1611 close only spot. (with options expiration on Wednesday — be careful)

CME NEWS

London Gold Fix $1,656.25 +5.25

Like a number of outside markets, gold seems to be anticipating an EFSF fund decision that will tamp down the contagion threat from the Euro zone. While the gold market could have been undermined by indications overnight of ongoing debate on the magnitude of the haircuts for banks holding Greek debt, the trade didn’t seem to think that issue was going to derail progress toward a favorable summit announcement on Wednesday.

Gold did see positive dialogue on gold as an investment, from a major fund manager and that probably combined with a generally up beat macro economic view, to lift gold prices this morning above the prior session’s high but gold could not hold those gains and has traded back in the mid 1650’s.

In addition to favorable fund manager dialogue overnight, the gold trade might also have been lifted by rather bullish gold price targets from the AngloGold CEO. While the looming summit could keep some players on the sidelines, it is possible that a series of slightly improved scheduled US data points today could benefit the bull’s in gold, as gold seems to be behaving like a commodity market in need of an improving economy. However, in the event that the haircut issue on Greek debt holdings presents a major conflict within the EU, that could prompt a sudden liquidation in gold and therefore gold traders need to keep a close watch on the headline flow from Europe today. While equity markets in Asia and Europe were mixed during overnight trading, US equity markets opened down 100 on the dow. The US Dollar is near unchanged levels against most of the major currencies this morning. German Consumer Sentiment during late October was at 5.3, higher than market expectations. A measure of French Consumer Confidence during October was at 82, higher than forecasts. The first leg of the Treasury’s refunding, the 2-Year Note auction, will have results announced at 1:00 PM and US Consumer Confidence down big from 46 to 39.8 — the worse number since 2009.

Going to the Chart

The gold chart is sending mixed messages today. The sideways price action continues to warn that gold can still move in either direction and with this type of action, it makes trade risky. For the second day we see resistance came in at the mid 1660’s area in gold. While gold may have held important support last week, it is still acting like it has pressure on the upside. The options expiration on Wednesday and the EU meeting seems to be keeping gold in a trading range until things break one way or another. At the moment, we still can’t eliminate the downside potential, so be careful. Resistance for the remainder of the day is the 1664-1668 area and support is the 1633-1641 zone. In summary — remain cautious. With the gold pattern in this sideways mode — price can still move either way. A big move should be developing this week one way or another.