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June 8th Gold Trend Analysis

In last nights website update — resistance was listed at 1546-1555 and the high so far today is 1546. Support was listed at 1533-1538 and the low so far today is 1530.

Trades: (10;55 AM)

currently short from 1551.90 –(Bgt 1/2 back at 1545.90) — I’m closing the position by buying it back NOW at 1533-1534 NOW (basis spot forex). And will reshort the market at 1547 — with a stop at 1557.

London Gold Fix $1,535.50 -$7.10

CME NEWS

With Indian gold overnight a touch weaker and generally failing to give off definitive direction, the gold market is searching for a key focus in the early Wednesday US trade action.

The US economic report slate is relatively empty this morning and that might mean that uncertainty off the US economy will also be missing. However, the gold market will see a Fed Beige book release and a Fed speech in the afternoon trade and that could produce a modest wave of volatility in gold prices. Some gold traders were a little disappointed that Bernanke failed to foster ideas of QE3 yesterday in a speech. Recently the gold market seemed to be feeding higher off macro economic uncertainty and with a slight lull in scheduled US data flow and the announcement of OPEC to leave oil production unchanged, gold remains in in a trading range between 1530-1555. Price traded right down to the 1530 area as New York opened up, but the indecision by Opec ministers to reach conclusions sparked an initial reverse in oil price and that carried gold back to the 1543 area on a spike.

The Chinese yesterday seemed to add a fresh wrinkle into the uncertainty equation by suggesting they were monitoring the amount of investment they were channeling toward the US. At least in the early action today it would appear as if technical action is ushering in some long profit taking and selling but the gold market will probably see its range expanded into the early afternoon trade today.

While equity markets in Asia were mixed during the overnight session, stock indices in Europe are weaker this morning. Early indications are that US equity markets are open with minor losses this morning. The US Dollar is mildly stronger against most of the major currencies this morning, although posting losses versus the Yen and Swiss. As long as the dollar is closing below 74 is remains in a downtrend.

In a speech after yesterday’s session, Fed Chairman Bernanke offered no indication that the Fed would start a new round of quantitative easing measures later on this year. A credit rating warning that the UK could be at risk of a rating downgrade. The German Trade surplus during April was 12.0 billion Euros, slightly lower than expectations. The second leg of the Treasury’s monthly refunding, the 10-year note auction, will have data announced at 1:00 PM EST. The market will also see the release of the Fed Beige book later today.

With the ECB interest rate decision on Thursday, the market may remain somewhat subdued as the market is still concerned with potential hawkish tones with respect to rates. Our own take is they will leave rates alone.

Going to the Charts:

Today’s lows at the 1530 area just below the 61% retrace at 1533 held and another push back to the mid 1540’s transpired on the OPEC announcement. From a technical perspective the push back up has held the support area it needed to do — and as long as price remains above 1526-1530 on a closing basis the short term trend has not yet turned down. The chart shows the neutral zone — circa 1533-1553 and until we get a close on either side the market remains neutral. There is a mini red channel that provides momentum — and this mornings move under it is warning that the trend is still under pressure. Thus the 1526-1530 area is the line in the sand at this point. With mid week Wednesday here — there is a potential for the lows to be today. ANY CLOSE below 1526-1530 would favor lower prices. Even a break of today’s lows would favor to the bears. ON THE UPSIDE — it takes a close above 1555-1560 to favor the upside….. otherwise the potential to move lower still has the advantage…especially on a break below 1526.

by Bill Downey

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