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June 7th Gold Trend Analysis

ALL PRICES LISTED IN FOREX SPOT

In last nights website update — resistance was listed at 1547-1556 and the high so far today is 1550.20 —- support was listed at 1533-1537 and the low so far today is 1540.80

Trades: (Price listed is Forex Spot) I am short from 1551.90 yesterday — per website update last night, I covered 1/2 at 1545.90 — Stop Listed was 1557 spot for remaining position— I am RAISING STOP to 1562 Spot until Wednesday where we might once again see the high for the week.

Floor traders seem to be selling the 1550-1555 spot area with stops above 1562 — and they seem to be day buying it back in the 1538-1542 area. A break of 1538 would favor 1529-1533.

Resistance for the remainder of the day is 1548-1552 and 1555-1557 if needed —– support is 1538-1542 — and then 1529-1533.

CME NEWS

London Gold Fix $1,548.40 +$8.40

Apparently mostly higher equity market action and a lower dollar hasn’t changed the action in the gold market so far today as gold is currently caught in a trading range in the 1535-1555 spot area at the moment.

There was some ongoing investor demand for gold in Europe overnight, as some money was seen flowing toward gold derivative instruments due to ongoing concerns toward the Euro zone debt crisis. One of the things to watch is whether or not the Chairman of the US Fed later today will confirm US weakness, or if he plays down the recent track of weak US data as FED chief Bernanke and regional president Lockhart will give speeches. With another new low in the Dollar this morning putting the Greenback down to levels not seen since May 5th, the gold trade has not been able to benefit directly from it so far as it remains caught in its trade range.

So far today, a weaker US Dollar and the prospect of slowing retail chain store sales is putting the DOLLAR near critical levels once again on the charts. A senior Chinese official warned that his nation should guard against risks from “excessive” holdings of Dollar-denominated assets. In looking ahead today on other data, a scheduled US Consumer Credit report will be later in the afternoon and a mid session 3 Year US note auction data.

While equity markets in Asia and Europe were mixed during the overnight session, US equity markets have opened with 1/2% gains this morning. The IMF may be willing to extend Greece’s repayment terms for international loans. Euro zone Retail Sales during April were up 0.9%, higher than market expectations. Major US economic numbers to be released this morning include US Consumer Credit during April at 3:00 PM EST, and a survey of store sales released throughout the session.

GOING TO THE CHARTS:

Gold remains in a tight trading range of 1540-1555 so far this week. Price once again tested NEAR the 78% retrace area at 1550 before this mornings pullback into 10am EST at the 1542 area. There is one more fan line of resistance just above 1560 —say 1562 that might provide the high’s going into MID WEEK WEDNESDAY if the market can push higher today and into noon tomorrow. The 10am EST low is suggestive that price should continue higher into the latter part of the New York session and into Wednesday morning. With a buttonwood daily date due on June 7th-8th — the potential for a high today or tomorrow for the week is the favored outcome at the moment. The goldtrend short term weaker trend is also in its time frame — BUT WE NEED TO SEE PRICE BREAK BELOW 1529-1533 to confirm its effect on price.

SUPPORT in the 1538-1542 area has been key so far this week — and that is the downside area to watch. UNTIL PRICE can break below that area — the upside is still favored to peak between now and Wednesday. Price is right in the middle of the purple channel and in a trading range. RESISTANCE is 1550-1553 ——– and a break above that area will favor 1557-1560 in spot. Support is 1538-1542 —- and a break of that area would favor 1529-1533.

In summary — GOLD needs to break below the 1533-1538 area as a MINIMUM — other wise the bull’s still have the advantage. Our best take at the moment is a peak between now and Wednesday at the 1550-1553 area — OR 1555-1557 in SPOT. Moves above the upper fan line at 1560 would be suggestive that the market is not ready to move lower. OTHERWISE — with a buttonwood turn date due today and or tomorrow… and the weaker trend also due to be in effect from last week — the downside action will have the ADVANTAGE on a break below 1533-1538. Remain defensive.

by Bill Downey

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