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26th April Gold Trend Analysis

In last nights website update — resistance for gold was listed at 1508-1515 and the high thus far is 1507.60  —–   support was listed at 1489-1495 and the low so far is 1495.20

London Gold Fix $1505.00 -$2.00

After the aggressive run to new all time highs yesterday, gold is showing some profit taking action in the Tuesday US trade. Factors include talk that the Chinese might be poised to undertake further tightening efforts in order to curtail inflation pressures in that country, and the fed’s open market meeting today and tomorrow.

The gold market did get some support from residual Euro zone debt concerns overnight, but a well received Spanish debt auction damped down that potential.

Furthermore, the gold market could have been knocked off balance somewhat by a Moody’s downgrade of Barrick gold overnight, which apparently is considering acquiring of another mining company.

Surprisingly the gold market doesn’t seem to be garnering support this morning from expectations of a dovish US FOMC meeting, perhaps because that statement and press conference isn’t due until early Wednesday afternoon. Other traders suggest that the sharp range up action last week and again on Monday largely factored in a supportive Fed and therefore a measure of profit taking is to be expected. With Indian gold prices also showing some corrective action overnight that seems to have given consolidation action in the early US Tuesday trade action.

Equity markets in Asia were mostly lower during overnight trading, while most of the major European equity markets were generally higher this morning.

The Dollar is weaker against most of the major currencies during overnight trading.

Hundreds of demonstrators have been arrested in anti-government protests in Syria and the situation here needs to be watched carefully.  The excalation will be gold positive in almost all aspects.

Major US economic numbers released this morning include a survey of US Home Prices –which came in lower — but was probably already factor in.   The first leg of the Treasury’s monthly refunding, the 2-year note auction, will have data  announced at 1:00 PM EST

Going to the gold chart:

Our first target of 1515 was hit this week — and we took 1/2 our profits from longs established at a 1438 price average in April as listed on the website.  Price came within a whisker of hitting the upper purple channel line — but was close enough to hit the partial profit target.  We’ve discussed the potential pullback into Wednesday and the Fed meeting —- and there are a few area’s to watch.   It looks like first WEEKLY support is going to be the upper dotted trend line in the 1480-1485 area.  —- The other support area is the 1465-1470 area where the lower purple channel line resides.

We think there is one more push remaining in gold into early May before a more significant pullback begins and favor some type of low this week in gold —– with a push up into the new month.   Mid day Wednesday would be ideal — and the market may use the Bernanke “public” speech on Wednesday to finish up the pullback scenario.

In summary — the pullback should have support near the 1485-1495 zone as a first target — and we won’t rule out a move to the lower purple line — but we like the first target better.  An ideal low would be Wednesday —- and then one more push into May.   Resistance is the 1503-1507 area for the remainder of the day.

by Bill Downey

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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."