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June 27th Gold Trend Analysis

In last nights website update resistance was listed at 1506-1513 and the high so far is 1505 — support was listed at 1483-1488 and the low so far is 1492.

TRADES: I’m currently short Gold at 1526 from last week — and have a stop loss order at 1447 stop close only.

CME NEWS

London Gold Fix $1,501.00 -$20.00

With an initial probe down to levels last seen on May 20th, August gold has started the new trading week off on a slightly weaker footing. Suggestions from the Chinese Premier that China might not be able to meet inflation targets has rekindled concerns of even more tightening by China in the coming weeks. The Greek debt issue has also fostered concerns toward Italy, Spain and other areas of the Euro zone and recently Euro zone debt fears have been a mixed bag for gold prices. However, against a backdrop of ongoing tightening dialogue by China, fears of slowing in the US and ongoing knock on fears from the Euro zone have left gold and many commodity markets in a weaker posture on the charts. However, deflationary slowing concerns are being countervailed by safe haven issues, which are accentuated by talk of a US debt downgrade in the event that the US fails to get a deal prior to August 2nd. Gold might attempt to garner some positive lift from a story overnight suggesting ongoing central bank buying of gold ahead, but without fresh evidence of that action, shorter term slowing fears and declining inflation vibes might leave the bears confident. Therefore the flow of US economic data this week could be critical to the direction of gold, as gold looks to take some direction from fundamental forces.

Going to the Charts

Last weeks failure to close above 1555 and the subsequent sell off has gold at an important area at the moment. The break of the dotted uptrend line has pulled gold to an area that was important in May for support (see Red arrow). There was a lot of back and forth there and now that we have broken the trendline —- THIS is where it counts —– and whether it has the ability to reverse and get back above this line while at the same time providing a Monday low from which a bounce can develop and try to re-enter the price wedge. While this area is an area for a bounce attempt — should there be a failure here — there is much stronger support in the 1475-1480 area where the 38% FIB retracement number is for the 2011 price range.

Our best take is that gold trys to forge a bounce attempt in the 1485-1490 area as that is support for the remainder of the day. We’re not sure if we should expect a bounce attempt into mid week Wednesday —- or if gold will continue to sell off until Wednesday — and make its bounce attempt into the end of the week. Our best take is that gold attempts to make its way back above the 1500 level — and should run into resistance at the 1506-1511 area going into Tuesday.

Short term traders are taking some profits near the 1490 area from their shorts — but the over all trend still has the bears in charge at the moment. Resistance for the remainder of the day is the 1502-1506 area and support is the 1485-1490 area and the 1474 area.

At the moment —traders are selling rallies ————- the 1506 —1519—-and 1525 area’s are the zone’s they are targeting. Bounces aside — the trend at the moment remains down. Gold should attempt a push back up towards 1506-1511 on bounce attempts in the next few sessions.

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."