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June 23rd Gold Trend Analysis

In last nights update resistance was listed at 1551-1556 and the high so far today 1548. Support was listed at 1531-1537 and 2nd tier was listed at 1519-1525 and the low so far today was 1517.50

Trade: Currently long 1/2 position (1 contract) at 1526 Gold. (1/2 this position was sold at 1544.20 earlier this week) — I have a sell stop close only at 1526 to exit the position.

CME NEWS

London Gold Fix $1,541.50

With a noted range down failure on the charts and a trade range in August gold to June 20th levels, the bears have the Thursday US trade with the edge. The primary pressure behind the last 24 hour reversal in the gold market is the announcement of a release of 90 million barrels of oil from the strategic oil reserves and the poor work report released this morning in USA.

This has the stock market down 120 points, Oil off 4 dollars, and gold off nearly 25 dollars.

In addition, evidence of slowing from China and the Euro zone overnight undermined gold and commodity markets this morning before the Oil and work reports from USA. Some gold traders tried to spin the Fed news into a positive, by suggesting they were relieved that the Fed wasn’t poised to raise rates, but most markets were disappointed in the lack of hints of further easing from the Fed. The market might have garnered some support from news of a rise in Indian gold imports, but instead the trade seems to have been largely sidetracked by a broad based commodity market sell off. In fact, with news of weaker Chinese manufacturing activity overnight, the gold market has been able to simply discount favorable gold import news. In looking ahead, the gold market seems to be undermined by talk of slowing and therefore, it will take something distinctly positive from global economic reports to take control away from the bear’s.

The US Dollar is stronger against most of the major currencies this morning. The President of the European Central Bank said that the Greek debt crisis was a serious threat to Euro zone financial stability. The Finance Minister for Greece will skip an EU summit in order to meet with inspectors from the IMF and the EU. A survey of Euro zone manufacturing during June was 52.0, weaker than forecasts. A survey of German manufacturing during June was 54.9, lower than market expectations. Major US economic numbers released this morning include Weekly Jobless Claims which was below expectations and May New Home Sales came in at low levels (300K).

THE USA debt ceiling budget talks are also at a impasse as reported this morning as talks are in breakdown.

Going to the charts:

We’ve been using a close above 1555 to suggest higher prices in the short term and yesterday’s failure to close above that level (and all the news this morning) was enough to crunch the market this morning. The chart tells the tale — a failure to close above 1519-1526 today could lead to a test of the 1504-1510 area with the potential for lower prices into the seasonal. Support for the remainder of the day is 1504-1510 intra day — and 1519-1526 on a closing basis. It’s best to remain defensive at these price levels as the bears are in control.

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."