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Gold Trends Intra Day Gold Update – March 1st

In last nights Website update resistance was listed at 1417-1424 and the high so far is 1423.20 in spot. Support was listed at 1396-1404 and the low so far is 1409.30.

London Gold fix 1414.50

Gold prices managed to rise in Asia overnight at a slow steady pace and opened in London near 1415. Prices were a bit softer in India and that seems to have dampened some of the initial strength in the early US Tuesday gold trade. However price rose sharply from mid session in London to the 1423 area as the New York COMEX opened.

With the calendar shifting to March and the March 11th day of protest in Saudi Arabia looming, gold could experience the move to quality or safe haven bid to remain a fixture in the gold market over the coming two weeks of trade. Gold might also be drafting off favorable Euro zone manufacturing readings and ongoing talk of rising inflation levels in the UK. However, inflation views aren’t expected to be fanned significantly by the US Fed Chairman testimony to Congress today because the trade generally expects the Fed head to discount the near term threat of inflation and in turn suggest that QE2 should continue.

In short, the Middle East and inflation views look to dominate sentiment in the gold market in the short term and that could mean that US scheduled data is of limited influence on gold prices. At least in the early Tuesday trade, it would appear that the focus of the trade will be watching a build up of Gaddafi forces, as the situation in Libya moves toward some form of end. Comex Gold Stocks were 11.075 million oz’s down 1,293 oz’s. Stocks have declined 14 of the last 20 days. Comex Gold stocks are at the lower levels of the past 10 trading sessions.

Last nights website update discussed the tendency for gold to move higher during the first week of the new month in the last 6 of 7 months and also that Tuesday’s have been good days for gold. On the 1406 Short term Long position from last nights website update — I sold 1/2 at 1419 as was posted as a first target and I’m now moving my stop up to 1396 on the remainder. With Fed Chief Bernanke testifying today and a slew of US data coming out —-and with the payroll report due on Friday —- the potential for gold to pause this area —– specifically the 1424 area — as it was the December high could develop into Thursday.

The non-farm payroll report on Friday in the past sometimes influenced gold to pause and drift sideways into the Thursday or earl Friday timeframe. Each report has been less and less over the past 6 months but it’s still something we need to keep a watch on and could influence gold. The Bernanke testimony also sometimes play with gold price ranges so keep that in mind today. While the potential for gold to move towards 1430-1435 is still a potential — getting rid of 1/2 at 1419 seemed to be the conservative play for me.

The Saudi Arabia stock market plunged 7% as middle east tensions continue and talk of a planned protest on March 11th persists.
The US Dollar remains under pressure and is fighting to hold the 76.50 area. Today’s dip to 76.70 was a new low for this year by a few ticks —- and this is an important area to watch.

The Euro is still slightly below its highs of this year — but any move above 139 would set a new high for the year and increase the pressure on the US Dollar. The Pound is near a breakout area also and the Canadian and Swissie have made new yearly highs against the US Dollar. In Bernanke testimony, he will repeat all dependant on the economy and how they are watching inflation closely —not to worry — and that unemployment needs to come down.

In other news ——from the CME

An official of the Libyan government said that nation’s oil production has been cut in half during the current revolt. The European Commission has raised growth estimates for the EU during the rest of 2011, but also warned of the potential for rising inflation in the region. The Royal Bank of Australia kept interest rates unchanged at their monetary policy meeting today. The official Chinese Purchasing Managers index for February fell to 52.2, above market forecasts but a lower overall reading since last August. Japanese Unemployment during January was 4.9%, in line with expectations. Euro zone Unemployment during January was 9.9%, lower than forecasts. German Unemployment during February fell to 7.3%, lower than forecasts.

GOLD CHART

From a price chart standpoint for gold — we discussed last night on the web that the upper dotted trend line would not hold price back much longer —-as we have been there for a week —–and with the new month and Tuesday that are usually strong points—– price has finally vaulted above the dotted trend line. Depending on what the market perceives from Bernanke and other developments—– the potential for gold to move to the upper red channel lines at 1435 also has potential. US MANUFACTURING comes out at 10am EST as well. Expectations are for higher readings.

In summary —- as long as price is above the dotted trend line — and within the red uptrending channel — and above the moving average on the chart —- the short term trend remains up. A pullback into Thursday that holds these area’s will be suggestive of another potential push up to close the week.

Reference charts can be found at Goldtrends.net

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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."