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June 9th Gold Trend Analysis

In last nights website update resistance was listed at 1539-1545 and the high so far today is 1540.70 —- support was listed at 1526-1533 and the low so far today is 1530.40

Trades: We covered the last portion of the short from 1551.90 at 1533.90 yesterday. I currently have an order to sell 1 at 1547 and 1 at 1526 on a stop from last nights website update. I’m cancelling orders and waiting for the market to begin trending again.
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Day Market traders are still selling the 1540-1545 area with stops at 1557 — and they are buying the 1530-1533 area with stops at 1525 as the market remains in a neutral trade range.
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London Gold Fix $1,534.00 -$1.50

The gold market started the Thursday US trading session off on a slightly weaker footing despite somewhat supportive dollar market action but moved back to 1540 on interest rate news from UK and Euro and more agreements on Greek bailouts PEGGED AT 66 BILLION. The ECB is trying to focus on the rollover or restructure of this debt. They want to see some CREDITORS get involved. Any rollover or solution has to be VOLUNTARY by the bond holders to not panic the market.

Deficit talks in USA open up again today — with the White House considering a business tax break — the big question is will these discussions enter the deficit debate. The employment numbers are just not there and there will be no recovery in USA without jobs —and a real estate revival of some sort.

This residual concern of slowing in the US economy and the slew of reports coming on Friday has gold still in its trading range of 1530-1555. The magnitude of the slowing fears in the US aren’t higher enough to prompt a lot of buying action so far — but the market is probing its first daily resistance in the 1540-1545 area today.

Some traders think that gold is deriving some support from the tensions in the most recent OPEC meeting, where the cartel was clearly divided between raising production and holding production steady. Those OPEC members against raising production levels suggested that they were concerned about overheating in the Chinese economy, especially if energy prices were reduced in the wake of a higher output move. In fact, the main dispute inside OPEC was on the outlook for the global economy and that might indirectly provide some support to gold prices ahead.

In looking ahead, the gold market will see a couple US Fed speeches today, with the Fed’s Plosser already weighing in with a partially dovish statement overnight. With the Fed Beige book, US data and recent Fed statements mostly leaning toward more slowing in the US, it is possible that some gold bulls are becoming hopeful of a delay in the end of QE2 or some other gold supportive stance from the US Fed.

While equity markets in Asia and Europe were generally weaker during the overnight session, the US equity markets opened with moderate gains this morning. The US Dollar is weaker against most of the major currencies this morning, although posting gains versus the Yen and Swiss.

The IMF has urged China to let the value of the Yuan rise further in order to help rebalance the Chinese economy. Japanese GDP during the first quarter was down 3.5% year-on-year, weaker than market expectations. The UK Trade deficit during April was 7.39 billion Pounds, a smaller deficit than projected. The Bank of England held rates steady, as did the European Central Bank. European Central Bank President Jean- Claude Trichet signaled the bank intends to raise interest rates next month, saying “strong vigilance” is warranted to contain inflation — and THE EURO sold off on the news as traders paired their expectations anyway.

Major US economic numbers released this morning were Weekly Jobless Claims and the April International Trade Balance narrowed, and April Wholesale Inventories at UP .8% and sales gains .3% . In addition, Fed Vice Chairman Yellen and Fed Regional Presidents Plosser and Pianalto will give speeches during the session. The last leg of the Treasury’s monthly refunding, the 30-year note auction, will have results announced at 1:00 PM EST.

Other News:

Reader Mahaveer N. reports that From 1st of july 2011 a new law will come into force in India,wherein all the bullion dealers & jewellers will have to mention the PAN No.[income tax ID No.] of any purchaser of bullion or jewellery in their bills or vouchers for purchases of the value of Rupees five lakhs [roughly around $ 11000] or more.All these years and till now,anyone with unaccounted $$$ would just make the payment in $$$ and do the purchases with no trail left behind and vanish.Now it remains to be seen how things turn out because the maximum amount of unacconted $$$ in India is invested in bullion and property.6o% black and 40% white,I think this is one of the main reasons why there are negligible number of cases of defaults in property market,because loans are sanctioned on the registered value which is only 40% of the total value of the property. (Thanks Mahaveer)

SO FAR — mid week Wednesday has provided a low price this week —- and today looks like another trade range day as gold awaits the Friday reports and checks out first resistance in the 1540-1547 area today. Support remains the 1526 – 1533 area.

Going to the Charts:

The market is in a secondary upswing attempt, but trade is against resistance associated with the previous 1550 downturn level. A close over 1557 is needed to spark rallies to a breakout attempt over the 1577 swing high. The rejection up around 1550+ remains caution for setbacks and can continue the sideways or defensive congestion along 1525-1530 on the downside and 1550 on the upside. A close under 1504 is needed to signal a turn back to full bearish trade but DROPS BELOW 1526 would also be suggestive that gold bear’s have the short term advantageon the downside. OVERALL there is no change to the trading range as THE 78% retrace at 1553 is RESISTANCE — and the 61% retrace is support.

THE Price uptrend has not been broken yet. In summary — markets should remain in a trade range going into reports on Friday. NEUTRAL IS THE BOTTOM LINE and a trading range.

by Bill Downey

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