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July 1st Gold Trend Analysis

Report is from 9:30 am this morning — we’re traveling — and I had to wait to get to a spot where we can send out the report. Markets are closed on Monday in USA —- and with the July 4th schedule — we plan no daily emails until at least Wednesday or Thursday.

In last nights website update resistance was listed at 1516-1525 and the high so far today is 1502. Initial support was broken and 2nd tier was listed at 1485-1492 and the low so far is 1486.

Trades: I remain short at 1525 in Gold

The “media” has spun all the reasons for gold selling off this week. Some news say its the Greek bailout — and how lending someone 110 billion Euro’s because the borrower can’t even make the interest payment somehow makes things “better” and less riskly to Global contagion when all one is doing is kicking the can down the road.

The 2nd story bandied about today is the drop in Oil is lowering Inflation and that is putting pressure on the metals. As if 110 dollar Oil is different than 120 dollar oil on the inflation front —yea right.

However — the massive sell off in the Grains after a “SURPRISE” USDA report sent Corn tumbling right where the trend turns for the markets usually are in Grains — JULY. But the trurth is that industrial and seasonal demand is at its weakest this time of year for gold— and with most traders having left for the July4th long weekend — it is a perfect time for the SHORTS to be “pressing” this market down.

We’ve been discussing on the Website and watching as the weaker short term trends come in play and also that today JULY 1st was a cyclical day where the market has much higher potential for a LONG RANGE DAY.

Regardless of the reason — the only that matters on the short term is that price is going lower into the weakest part of the year — and that at some point is going to translate into a longer term accumulation point. For now remain defensive.

From a trade perspective — we’ve been short since the day the purple channel line broke at 1525 —- and for those of you following — if you don’t want to be short over the long weekend —now is the time to cover the position at a 40 dollar per oz profit. Swing traders can bring their stops down to 1533 stop close only or even 1526.

Going to the Charts:

Today’s look shows the entire move from 2011 and the chart has the 1474 area as the all important 38% retrace of that range. Thus the most important numbers from a support standpoint this coming week is 1474 on a closing basis and the 1442 zone where the 50% retracement number. Thus 1474-1480 and 1439-1450 are the two most likely targets where initial support should come into play for gold. On the resistance side — the 1515-1525 area is now the new resistance area on a weekly basis. Even the 1501-1506 area is going to provide resistance next week.

For the remainder of today — look for the 1471-1482 area as support —–and the 1492-1501 area as key resistance on any bounce back up. A close below 1506 today will keep the downtrend intact into next week.

In summary — the short term downtrend we’ve been following remains intact — and we’ve gotten our long range day on the downside. The SHORTS have taken the route to go after at gold’s weakest moment. Look for gold to bounce near the all important 1474 area we listed last night on the website — as its the 38% retrace of the entire 2008 move.

Bounces aside — the downtrend remains in effect.

by Bill Downey

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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."