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29th december Gold Trend Analysis

Last nights update listed 1532-1544 as first resistance and 1520-1522 as 2nd tier and the low was 1522. Resistance was listed at 1566-1578 and the high so far today is 1561.

Trades

CME NEWS

London Gold Fix $1,537.50 -$46.50

The bull’s might have hoped to see gold prices check up, in the wake of Italian debt auction results this morning that were judged to be just low enough to tamp down Euro zone debt fears. However, the bear’s might suggest that the yields on the longer term Italian instruments remained close enough to unsustainable levels, to keep fear in place.

The dollar markets also saw the auction results to be lacking, as the Euro was softer against the dollar while the Canadian and Yen were showing signs of a risk off mentality. With February gold falling through a series of potentially critical chart support points overnight and for most of this week, it is likely that gold is seeing both capital and margin related liquidation. In the current environment, news of higher Russian gold is probably discounted and it is also likely that a sweep of decent US scheduled data points later this morning might be capable of shifting sentiment around in the gold market. In fact, it could take better than expected US numbers and a noted turn up in US equities just to hold the gold market from ongoing selling pressure ahead.

Some traders even think that action in the gold/silver ratio will be discounted, as the interest in all precious metals markets continues to deteriorate. Equity markets in Asia were lower overnight, with European stocks initially opening higher but mostly marking time ahead of the Italian debt auction results. The US equity markets also showed initial positive action but the trade wasn’t giving off a definitive direction. The longer term Italian debt auction went off with yields coming in just below the supposedly unsustainable 7% level. In other developments overnight, Greek inflation was down from the prior readings, but was still at levels that might be considered unsustainable by some. The US Dollar was marginally stronger against most of the major currencies, which was somewhat surprising considering the acceptable Italian auction results. The scheduled data flow from the US today includes initial and ongoing claims came in at 317 K, Chicago Purch index at 62.5 vs 61 estimate and Consumer comfort at -47.5 — Pending home sales up 7.35% from prior month — YOY up 6.3% — but this number is so fudged it’s crazy. However, that doesn’t matter, it will be looked at good news for stocks. THE media keeps saying — its a TONE OF IMPROVEMENT and we keep seeing it.

Going to the charts

Prices have reached a long term support line and we’ll be very surprised if we don’t get a bounce at this point. Certainly with the very low volume, it is not out of the question as the “control boyz” have once again picked a low liquidity week from which to launch a major attack. It is this coincidence that keeps us suspect that this sell off could be one that is “planned” as a wipeout. The gold chart shows us at the FIRST major long term support line —- that lower green channel line. There should be a bounce at this area —- but with Friday in front of us and New Years –and markets not open till Tuesday in USA, the question is do we want to be long ? SUPPORT is 1520-1523 and resistance is the 1544-1550 area. In summary, we can’t exclude lower prices — and for the moment, we think this is just a bounce with another test coming next week and potentially lower prices. If your a long term buyer — this is certainly an area where a consideration should be applied.

We expect a bounce from this 1520 area to 1544-1550. The weekly close will be important also. We want to take a position here, but due to low volume we’re not sure if the “control Boyz” have something planned for Friday. We think we’re seeing the lows for the week here. Next week however, can still be the final flush out. Like I said, I’m tempted to take a position, but am concerned in doing so going into a long weekend. Look for a bounce to 1544-1550 on the upside and look for 1520-1522 as initial support. I’m very tempted to long one here — but will remain patient. I’ll mail if I take a trade. In sum the trends are still down but we are very oversold and a bounce at this area should be in play until Friday. I’ll email if I decide to take a position.

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."