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9th december Gold Trend Analysis

Last nighs website listed resistance in gold at 1720-1737 and the high was 1724 spot gold. Support was listed at 1694-1704 and the low so far today was 1703.

Trades

Long silver at 32.35 Basis March ==== Use same instructions as website.

London Gold Fix $1,712.00 -$27.00

The gold market started the early Friday morning US trade just above the prior session’s lows and roughly $41 an oz below this week’s highs as the gold market initially seemed to fear the outcome of the EU summit. While the EU has indicated they will implement even more austerity ahead and attempt a fiscal union, the trade so far hasn’t seen enough details on the debt backstop plan to fully discount the prospect of further debt contagion issues.

The gold market might have been somewhat undermined by softer Chinese inflation news overnight and perhaps gold was also pressured from lingering Chinese slowing concerns. However, some economists and analysts think that the overnight data from China will prompt the PBOC to move away from a tightening posture and back toward a growth posture and that could eventually lend some support to gold prices.

Without the EU centric focus this morning, gold might have benefited from news that African Barrick announced they will miss their 2011 gold output target because of power issues, especially since that news comes in the wake of news that overall South African gold production showed a year over year production decline in the latest monthly figures that were released earlier this week. In fact, the gold market also saw signs that a Russian gold miner was moving to reduce its gold production guidance and that would be supportive of gold prices if the trade wasn’t obsessed with the EU and the demand side of the equation.

Given the EU summit focus this morning, scheduled US data like the Trade balance and consumer sentiment figures might simply be pushed to the back burner today. In the end, many traders think today will eventually be a very critical pivot point for gold, with the trade embracing either a risk on, or risk off view in the wake of the summit package. While equity markets in Asia were generally lower during overnight trading, stock indices in Europe are slightly higher this morning. US markets are open with moderate gains. The US Dollar is unchanged against most of the majors this morning. Japanese GDP during the third quarter was up 1.4%, higher than market forecasts. Chinese CPI during November was up 4.2% year-on-year, lower than expectations. The German Trade surplus during October was 12.6 billion Euros, lower than projections. Major US economic numbers to be released this morning include the US October International Trade Balance at 8:30 AM, and Consumer Sentiment was 67.7 vs. 65.5 –

Going to the chart

It’s been quite a week as the shake out attempts in gold have spawned 50 dollars down — 50 dollars up — and 50 dollars down again. It’s a relief to see Friday. The 1703 area has been tested 1/2 dozen times and 1695-1703 remains the last support until the 1665-1680 area. A trend decision is due by Monday as to which direction the market will most likely move. Resistance for the remainder of the day is minor at 1715 spot — and then again at 1725. It seems the key is whether gold holds that 1695-1703 area. With the current situation in gold allowing for either direction to unfold — its best to remain on the sidelines with the short term trade situation until next week where trend is most likely to reassert itself.