Partners

June 10th Gold Trend Analysis

In last nights website resistance was listed at 1547-1555 and the high was 1545 — support was listed at 1526-1533 and the low so far is 1533

TRADES: I covered my gold shorts this morning at the level that was listed on last nights website and I have no positions at the moment. Both short trades this week were closed out profitable.

London Gold Fix $1,541.00

After a fairly impressive push up yesterday, gold buckled this morning at around 8 am and price has moved down to the critical 1526 area. A close below this area and the trend will remain bearish.

The gold trade didn’t seem to move this morning off news that the latest Greek debt package was being viewed favorably by the German Bundestag as Germany wants investors to participate in the losses.

Yesterday’s rebound in stocks was a dead cat bounce so far and the equities remain in trouble. But Friday can do anything near the close — so we’ll have to watch it.

While equity markets in Asia and Europe were mixed during the overnight session, US equity markets opened lower and are off almost 1% again today.

The US Dollar is stronger against most of the major currencies this morning, although posting a minor loss versus the Yen. The German Parliament has voted to support an additional aid package for Greece, but the head of the European Central Bank said that the ECB will not directly participate in any bailout. South Korea raised their benchmark interest rates for the third time this year. The Chinese Trade surplus during May was 13.1 billion Dollars, lower than market expectations. German CPI during May was up 2.3% year-on-year, in line with forecasts. UK Industrial Production during April was down 1.7%, much weaker than expectations. UK PPI during May was up 5.3% year-on-year, in line with forecasts. The only major US economic number to be released this morning will be May Import & Export prices at 7:30 AM. In addition, Fed Regional President Dudley will give a speech during the session

Going to the charts:

We’ve watched the trading range of gold all week — and we’ve been using 1555-1557 as the point where we would concede to higher prices. Because of the weaker cycles due we’ve shorted the market a few times this week, first at 1551.9 and at 1547 yesterday and covered the short position this morning on levels given on the website. The question now becomes — CAN GOLD hold this key 1519-1526 area and the lower dotted trend line on the chart. The next turn point is the 13th thru the 17th of June. WE STILL NEED A CLOSE BELOW 1519-1526 in order to ADD to bearish potential.

ONE COULD MAKE A CASE TO GO LONG HERE at 1527 with a stop at 1517 —- but it is only a 50-50 risk reward as to whether we recover or not. ANY CLOSE BELOW 1519-1526 keeps the TREND DOWN.

With the RUMOR that China might raise rates over the weekend —- it is questionable as to whether any position should be held on any short term long considerations going into the weekend.

In summary — the 1519-1526 area is the key and whether it holds there. THERE HAS BEEN THREE tests of 1526 that has so far held. As long as that area holds — the potential to move higher into the close can still develop. With the weekend here — and some good trades this week — I am skeptical on being brave here and taking a long position. On the other hand — I have the same feelings about going short here. I’ll update on email if i make any decisions — otherwise I’ll wait until next week and look for set-ups then.

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."