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26th january Gold Trend Analysis

Last nights web update listed resistance in gold at 1717-1729 and the high so far is 1730. Support was listed at 1688-1695 and the low was 1703.

Trades

Looking for a set up — orders from last night on the website remain in place for today.

London Gold Fix $1,713.00 +$52.00

With a fresh new price probes for the move in February gold overnight and prices reaching the highest level since December 9th, it would seem like the US Fed’s promise of unrelenting low rates has provided the gold bulls with an ongoing lift.

Apparently seeing the rate forecast from the Fed project US rates will stay low until 2014, is providing a very supportive environment for gold. With Italian debt auctions overnight posting lower yields than were seen in the last auction, even the Euro zone situation seems to be mostly under control today. (we said SEEMS to be)

Gold has also seemingly discounted news overnight of a rise in gold production from at least three gold producers, as gold seems to be focused on the prospect of ongoing demand and in an environment of ultra low rates and only passing central bank concern toward inflation, the overall environment for gold generally seems to be favoring the bull’s. While the gold market thinks the Fed stance will continue to support gold prices, the flow of US scheduled data might have the markets attention early today, especially if the trade can come away from the data with a slightly positive economic vibe.

Asian equity markets were generally weaker this morning, with the Nikkei actually seeing minor declines. Apparently European equity markets were still garnering some lift from the US Fed Statements yesterday. The markets saw Italian bond yields fall slightly overnight, but that was a benefit to the Euro and the metals markets this morning. The markets also saw a minimal improvement in another German business sentiment reading, as that news seemed to add into the mostly positive vibe that was generated by the FOMC meeting! The markets will also see an extremely active flow of US scheduled data this morning.

Going to the Chart

We are using the GOLD ETF (GLD) today to highlight the important resistance point we’ve reached on the chart. Today’s highs have reached the 2011 uptrend line at the 168-169 area in GLD and the 1730 area in spot gold. The FOMC news saying zero rates forever was a giant boost yesterday to markets, but the news is not good news in any other manner as it indicates that even with everything they have done, they have not been able to put Humpty Dumpty back together again and it highlights the banking insolvency that is going on. With that said, this point on the chart should offer resistance and a consolidation today in price with a pullback to test support levels. First support on today’s pullback is the 1712-1716 area and then the 1696-1704 zone. A short term peak is due to take effect in the markets and usher in a pullback. As we’ve mentioned on the website for the past few days, PRICE RULES and cycles are secondary. The key now is to see if this last shot of “hopium” that was delivered to the market will be enough to extend this move higher or whether we peak here and usher in a pullback to test support levels.

In summary–the look for price to consolidate today with resistance at 1730-1733 as the likely highs but just in case, Additional resistance is the 1743-1752 area. The question now, is whether this can continue or whether we just saw the highs of this short term trend and a pullback now develops. The cycle window we watch for a short term peak ended this morning. There is also a buttonwood date on the 27th (tomorrow). Interestingly, a Martin Armstrong report I read has the 27th as a potential turn date.

THE TREND REMAINS UP — but price is at weekly resistance at 1730. Due to the strength we saw in the metals, resistance or not, I’m not going to try and short it. Not when it has this much strength showing. Let’s see what the consolidation looks like as we expect today to at least take a breather and drift in the 1712-1730 area.