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26th October Gold Trend Analysis

In last nights website update — resistance was listed at 1719-1726 and the high so far today is 1720. Support was listed at 1678-1683 and the low so far is 1693 (all prices spot gold)

Trades

I have a buy if 1682 spot gold is touched ——- for one position.
I have a buy in 32.20 spot silver is touched……….for one position.

CME NEWS

London Gold Fix $1,713.00 +56.75

Clearly the gold market has shifted back into a move to quality standing again, with the market seemingly heavily focused on the ebb and flow of the Euro zone situation. However, gold might have been lifted by less hawkish Chinese policy dialogue overnight as that would be a fresh direction for the PBOC. At least recently, gold hasn’t been overly undermined by slack US scheduled data and that would also seem to confirm the markets shift away from a commodity market focus.

At least in the early action today, the gold market might take a lot of direction from events in Italy, as the Italian government apparently put together some type of reform plan overnight and forwarded it to the EU. However, it is unclear whether or not the reforms from Italy will appease the EU and it is also unclear if government reforms will be accepted by the Italian population.

Eu talks with banks on Greek Bond “deadlocked” are — According to IMF and EU they want banks to take a 60% haircut. Banks of course don’t want to. That would be 100 billion Euro’s alone. Expect to hear leaks and conflicting news as the day wears on. SO FAR — BANKS ARE NOT VOLUNTARILY willing to take haircut SO FAR. IF EU forces it — then an “event” or default can come in play.

Gold probably saw some overnight support from favorable investment banker comments, that ultra low interest rates might be capable of supporting gold prices for another year. While the gold market might react to a soft readings from US durable goods and exhibit some minor weakness, the main focus of gold will probably remain on the Euro zone summit. While equity markets in Asia and Europe were mixed during overnight trading, early indications are that US equity markets will open with moderate gains later on today. The US Dollar is slightly lower against most of the major this morning, although posting a small gain versus the Pound. Euro zone leaders will meet today for the second leg of an EU summit on expanding the Euro zone debt rescue fund. German Import Prices during September were up 6.9% year-on-year, roughly in line with market estimates. The second leg of the Treasury’s refunding, the 5-Year Note auction, will have results announced at 1:00 PM est. Major US economic numbers to released this morning include September Durable Goods was down 0.9% after a 3.1% gain in August, September New Home Sales came in bigger than expected — up 5.7% to 313K annual rate.

Going to the charts

The gold markets rally yesterday was very strong and the weekly target of 1720-1730 has been reached with the high coming in at 1720. There is still a potential for a move up to the 1735-1750 area. Support is now the 1694-1700 area where was the previous high and the pullback low on Wednesday. Additional support is the 1680 area — and if there are any Euro surprises, and dip back to that area could be a good trade back up to 1720. In summary — with mid week Wednesday arriving — some type of pullback for the week is due —— and if there is a pullback into Thursday — buying the dip is what most traders will be looking at. With the rally this week — we have to keep favoring higher for the short term. The wild card will be the situation in Europe —– keep an eye on that as that is the wild card.

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."