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7th december Gold Trend Analysis

Last nights website update listed resistance at 1737-1744 and the high so far today is 1738. Support was listed at 1712-1716 and the low so far today is 1719. (All prices spot gold)

Trades

Long 1 mini Silver at 32.68 basis March — have LONG order at 32.02 to add 2nd position.

Gold — Currently flat and watching.

Note: New website in final stage will be ready for January.

CME NEWS

London Gold Fix $1,731.00 +$11.00

At least to start this morning, the gold market would seem to be presented with a slight risk-on environment. However, the risk-on vibe isn’t overly definitive as the dollar was at times higher and many commodity markets were trading weaker. Perhaps the gold bulls were a little discouraged by German comments overnight, suggesting some increased pessimism that a strong deal will be ultimately reached. In fact, the press is reporting comments from a senior German official overnight that his country isn’t in favor of an inter-governmental solution to the EU crisis and his country also isn’t necessarily in agreement on the need for a complete recapitalization of all European banks. There did seem to be some hope in Asia overnight that the ECB was poised to cut interest rates and that “most” European leaders were aware of the seriousness of the current crisis. However, comments overnight from Europe that not all EU members realize the magnitude of the current threat, could mean that some will remain content to move the can down the road again later this week. In the end, it would seem like gold is set to remain a commodity market in need of a strong EU resolution and that could mean gold will at times track in sync with the US equity markets.

While equity markets in Asia and Europe were for the most part stronger during overnight trading, the US markets are open with the Dow off 75 points so far today. The US Dollar is slightly weaker against most of the major currencies this morning. Australian GDP during the third quarter was up 1.0, in line with forecasts. UK Industrial Production during October was down 0.7%, lower than expectations. The only major US economic number to be released this morning will October Consumer Credit at 3:00 PM EST.

Going to the Chart

The chart in gold shows the massive wedge that is coming to an end and a decision is due for price to move out of this neutral area. There were two downtrend lines that we were watching and the drop this week and low yesterday pulled all the way down to the lower doted line. We discussed yesterday the potential of a reversal and that did play out during the afternoon. But so far nothing has been decided for sure in this market and the move can still be either way. We are in conflict as the “window” for a trend change begins today and will be open until Monday of next week. This is the time frame where trend is most likely to turn. We say most likely as there are no absolutes, only odds. So its a mixed bag where we are not sure at the moment (and we don’t think the market is either) of which direction we are going to move. The ideal day for a high this month is the 10th — plus or minus 72 hours. The trend change is usually good in 75% of the cases. The other 25% of the time develops an “inversion” where price would continue higher for an additional two week. There has not been an inversion since August. In summary, yesterday’s reversal has not traveled for enough for us to grade the short term anything else but neutral and I’m going to wait to see which way the market wants to move before taking a position as either side can develop. With the up and down, i’d rather wait for trend to take hold.