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June 2nd Gold Trend Analysis

In last nights website update initial resistance was listed at 1542-1546 and the high so far today is 1544.50 —- support was listed at 1526-1531 and the low so far today is 1536.

Trades: I have no positions at the moment. Price in trade range 1530-1550

CME NEWS

London Gold Fix $1,540.75 +$8.50

With Indian gold prices lacking definitive direction overnight, the US trade is generally without a strong bias to start the Thursday morning trade. However, the US Dollar generally remained soft overnight and that might give gold some minor related support this morning. The gold market has generally outperformed the rest of the metals markets this week and some traders suggest that gold benefiting from the uncertainty thrown off by slowing in the US economy, while the rest of the metals markets have faltered because of slowing demand fears. With Moody’s issuing fresh concerns toward the Greek debt situation again overnight, that could provide a fresh measure of safe haven support for gold prices, but it also seems as if persistent US slowing fears, at times have handcuffed the gold market. At times yesterday, the gold market was clearly benefiting from the lack of confidence in the US economy, from a lack of progress in the US budget situation and lastly residual Euro zone debt fears. Therefore, the bulls in gold has generally side stepped the potential drag on gold prices from slowing fears FOR THE MOMENT — but that could also be fleeting. Press reports of increased gold futures options activity yesterday might be seen as a sign that gold is regaining its move to quality standing in the marketplace again, especially since that action was supposedly noted in the face of a big washout in US equities.

While equity markets in Asia and Euro were generally weaker during the overnight session, US equity markets opened near unchanged this morning. The US Dollar is weaker against most of the major currencies, although posting a small gain versus the Yen. A major credit ratings firm downgraded Greece’s sovereign debt again, feeling that the chances of a default are now as high as 50%. Japanese Prime Minister Kan was able to win a no-confidence vote in Parliament, and offered to resign once the government made further progress with post-earthquake and nuclear reactor issues.

Going to the Charts:

The gold market remains in the trade range between the Fibonacci 50% and 61% retrace levels (1530-1550) — Thus this putsinitial support at 1526-1533 —- and any break of that area on a closing basis will be suggestive that the weaker trend we discussed on the website has most likely kicked in. RESISTANCE is strong at the 1547-1550 area and IT WILL TAKE A CLOSE ABOVE yesterday’s highs to favor a short term uptrend. At the moment — when we take everything into consideration — we have to favor the downside — especially on any break of 1526.

IN SUMMARY — Wednesday seems to have been the peak — but we need to see a break below the 1526 area for more confirmation. It would take a CLOSE above yesterday’s highs to favor the upside. The cross currents have gold in a consolidation day between 1330-1350

RESISTANCE 1544-1547 —- First support 1526-1533 —- any break of 1525 favors lower towards 1516-1519 with POTENTIAL for lower in the 1490-1505 area.

by Bill Downey

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