Partners

July 29th Gold Trend Analysis

In last nights website update resistance was listed at 1622-1628 — and 2nd Tier resistance was listed at 1638-1642 and the high so far is 1633 spot forex. Support was listed at 1605-1609 and the low was 1610 spot forex.

Trades: Long gold at 1583 — stop is 1599 stop close only
Long Silver at 35.15-stop is 38.40 stop close only

CME NEWS

London Gold Fix $1,613.75

The gold market generally remains in favor this morning and that is most likely due to a “delayed vote” in the House last night on the debt ceiling impasse and the crushing GDP data that came out this morning showing the US economy on the ropes. With a noted investment banker/brokerage firm overnight suggesting that gold prices could mount a massive spike up move off upcoming events, the gold trade is on high alert into the US Friday action. THERE was a massive volume spike on the FOREX at 1613 when GDP came out. While there is supposedly a US House vote scheduled for 10:00 Eastern time today, the way things are working in Washington, it would be unlikely to see a vote take place right on the scheduled time. The President came back on the tube telling Joe public to call their rep’s and get this thing passed. The panic is at fever pitch. BE CAREFUL — EVERYTHING IS DOWN HARD except gold and silver so as the day progresses it is going to get real interesting. The FED is probably going to jump in here and provide MORE liquidity.

While the gold market hasn’t paid that much attention to supply side developments lately, the South African mining strikes could combine with the turmoil in the US political arena for an environment that favors the bulls to HIGHER LEVELS. Gold’s pullback over night right back to our 1610 support area exploded higher this morning when the US GDP report hit.

The bulls will be emboldened if the talks break down again, but they might also have to be concerned about a weekend deal and an adverse reaction next Monday. AND THAT IS THE REAL THING TO BE ON THE WATCH FOR. All cycles we have been discussing on the website this week has been targeting Friday/Monday as the ideal day for a short term high. Today’s all time high satisfies that outlook. Should we get another inversion like we got on July 1st, then the market can move into panic mode on the upside.

Other sideline stories today in gold are seen from news that China granted a large bank access to the Chinese gold market and that could be seen as a long term demand positive development.

While equity markets in Asia and Europe were generally weaker during the overnight session, US equity markets are open with the obligatory 100 point loss to begin things. The US Dollar is getting pummeled agains most of the major currencies this morning, and price is IN DANGER ZONE.

House Republicans were unable to bring a debt ceiling bill to a vote last night. A major credit group has warned that Spain may receive a downgrade of their sovereign debt. Japanese core CPI during June was up 0.4% year-on-year, in-line with forecasts. Japanese Unemployment during June was 4.6%, higher than projections. Japanese Industrial Production during June was up 3.9%, lower than forecasts. German Retail Sales during June were up 6.3%, well above expectations. UK Consumer Confidence during July was -30, weaker than expectations. Major US economic numbers this morning of second quarter Gross Domestic Product came in at 1.3% — much lower than expected.

Going to the Chart

Last night’s website update discussed that the last trading day of July is usually a long range day, and its usually to the upside. So far we have a 25 dollar range — with gold up strong. Since its the last trading day of July and it has made an all time high, the potential to move higher into Monday is high. As discussed last night, this is also a weekly and monthly closing price. A close above 1625-1630 today will add more bullishness to the situation.

We also described the “tail” of the chart last night on the website. (See the green arrow) just below the lower dotted trend line. As we discussed last night — that type of pattern, where it breaks the channel and then re-enters it leaving a tail sticking out is usually a low point on a chart and is a bullish indication. That indeed turned out to be the exact low yesterday.

We are in the danger zone as the politicians are in emergency, the talking heads on the tube are trying to explain away the bad numbers, and traders have big decisions to make today. BE CAREFUL — as we have discussed — there are major cycles in play today and Monday as described on the website.

Next Resistance is the 1638-1642 today. Watch the 1625-1631 area as that looks like the pivot. IF we close above there the uptrend is still favored. Support is now 1622-1625 and 1610-1613. As long as we are above the lower dotted trend line the bulls are still in charge. Yesterday’s pullback supported right where it had to and as long as we are above 39 on a closing basis, the trend is up. In summary, anything can happen this weekend or even today with this debt thing. Extreme caution is warranted. A TREND CHANGE is due between July 29th and Aug 2nd and things can really change fast. ALL STOPS ARE BEING PULLED OUT to pass something today is usa and this thing can turn on a dime.

IN SUMMARY — BE CAREFUL — this thing can turn on a dime as its very dangerous. The politicians will pull out all stops to get something done today and a SPIKE can happen at any moment. Things are changing by the moment.