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30th january Gold Trend Analysis

Last nights website update listed resistance at 1755-1765 and the high was 1740. Support was listed at 1719-1729 and the low was 1716.

Trades – Long Gold (see website for details)

London Gold Fix $1,720.50 -$1.50

Despite starting out on a weaker footing this morning in gold early on, gold prices might have seen some support from weekend press coverage, which touted gold as a possible benefactor of an extended period of low US rates.

However, from a shorter term focus, the gold market is initially facing a weaker Euro, weaker global equity markets and a small measure of macro economic slowing fears which were apparently stoked in the wake of last week’s US 4th quarter GDP release. Greece is still working on a settlement, and major talks are taking place in Brussels today. The problems in Euro are not close to being over. Portuguese 10 year yields are at 35% — which gives you a good overview.

Commodities, Stocks, and financials are under some selling pressure this morning globally.

Asian equity markets were weaker this morning, as traders and investors in that region were apparently disappointed with the lack of a cut in the Chinese rate requirement. European equity markets were also weaker in the face of a lack of definitive forward movement on the Greek debt talks and perhaps because of a lack of confidence in the coming EU summit. Somewhat surprisingly, European markets didn’t see much benefit from news that Italian auction yields fell from prior auction levels this morning perhaps because of the lingering uncertainty over the EU summit. Euro zone consumer confidence levels improved slightly overnight, but those figures remained in negative territory. Some traders think the lack of forward movement on Greek debt talks could stall planned changes by the EU directly ahead and therefore the focus on Greece might be expected to escalate in the days ahead.

USA markets are open and the DOW is down 100 points.

IN SUMMARY – the Greek debt factor is the main story of the day and more meetings are due today in Brussels. Greek 10 year was 36% this morning — and Portugal came up to 16% — which is the uncertainty and worry of contagion.

Going to the Chart

Gold has held the pullback rather well and found support just above our listed area on the chart. Thus today’s pullback, although unusual for a Monday has held up well. There was a lot to be dissapointed about this morning for the gold bulls, but it looks like end of the month buying pressure is acting as a counter balance. The chart clearly shows the Monday pullback is also due to the upper resistance line in the channel that has developed since the 1520 low in December. Thus this pullback is normal so far. By tomorrow that upper channel line should be pointing near 1750. Support is 1722-1725 for the remainder of the day and resistance is the 1735-1737 area and then 1745.

As long as we close above 1725-1730, the overall trend remains up into Tuesday.

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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."