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April 7th Gold Trends Analysis

In last nights website update resistance for today was listed at 1467-1478 and the high so far is 1465 — support was listed at 1443-1449 and the low so far is 1452.

London Gold Fix $1456.50 -$.50

A portion of trade strength this week is due to rising inflation expectations and a portion of the trade to the uncertainty surrounding the US Budget debate. Apparently some players either decided to bank profits because of the recent upside extension, or perhaps some longs simply feared the ECB rate decision this morning of a 1/4 point rise, as a key gold fund did see a decline in holdings yesterday. So far the rate increase for the Euro is a non event in the markets as it looks like a consolidation Thursday type of market.

The ECB rate decision might have a short shelf life because of all the other things going on. The Euro is actually lower on the news –as price had been bid up going into the decision and there is a slight back off this morning as the dollar is a bit higher against the Euro. The key price everyone is watching on the dollar is the 75 area —– and the dollar is just slightly above that level at 75.50. Portugal has asked the EU for an aid package due to extremely high yields on their longer-term debt.

Indian gold prices had a bit of weakness overnight and there were some negative technical views toward gold floated in the Asian press coverage overnight. One might have expected the gold market to benefit early this morning, from comments from the Fed’s Pianalto, who reiterated the need for low US rates and also differentiated the US and Euro zone economic conditions.

Going to the charts — gold has been consolidating for the past 36 hours in the 1450-1460 area and this mornings move to 1465 over the last hour should be near first resistance for the day as it arrives near the 10am EST frame — a notorious time zone for intra day changes.

There is not much to report other than that. Resistance for the remainder of the day is 1467-1470 and suppport is the 1449-1453 area. Our best take is that if there is a pullback this week — today is the best day for it to begin, but thus far — gold still looks strong so it may just be more consolidation as it has been over the past day two days. The ability of gold to hold in this area suggests that there is still strength in the market.

As far as the trend — as long as price is above the lower purple channel line — the over all trend remains up.

by Bill Downey

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