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May 24th Gold Trend Analysis

In last nights website update initial resistance was listed at 1519-1527 and the high so far today is 1527.50 — support was listed at 1498-1507 and the low so far today was 1513

CME NEWS

London Gold Fix $1,520.75 +$12.25

June gold managed a fresh new high for the move overnight and in the New York session as residual concerns of debt contagion problems in Europe and a rebound in energy prices dominate the Tuesday trade. Global equity markets traded higher during the overnight and early morning hours, with mixed to higher prices in Asia and higher European indices. This has helped US equity markets stabilize from Monday’s weakness, and they have opened higher with slight gains.

The gold market wasn’t concerned about talk that higher gold prices prompted some softening in Indian gold demand overnight. With a recent rise noted in Credit default swaps for US debt, it is clear that some thought toward the US debt situation is included in the overal global concerns. Greek debt concerns continues to push rates higher.

On the one hand, the gold market seems to be somewhat held back by fears of slowing, but slightly better performance in global equity markets overnight and higher crude oil price targeting from a major spec overnight, seems to be over riding the fear of slowing in the early Tuesday gold trade action. As we pointed out on the website last night, seeing gold priced in Pounds and Euros hitting fresh records this morning, should provide the bull’s with enough momentum for higher price in the US Tuesday trade.

US NEW home sales for April came out showing 323K — and while they spin it as a rise of 7.3% —- the number is very low — and is only 50K higher than the all time low at 273K from February. it’s a non-issue and no effect on the markets so far. Longer term — the US economy will need the housing market to sustain any long lasting gains. There are 3.6 million homes in forclosure and there were 21 bank failures in USA during the first quarter.

The US Dollar has pulled back to fill the Gap up from Monday’s price rise as the Euro rebounds and so far — it looks like its only a pullback — but will have to be watched. The strength in the dollar is mainly from the Euro’s weakness over the past two weeks.

First quarter GDP data out of Germany this morning matched expectations, with a gain of 1.5%. May German sentiment readings came in above expectations, while Euro zone March factory orders came in slightly worse than expected.

Going to the Charts:

We’ve reached the first price target as laid out on the website on the weekly button at 1522-1529. The other listed target should price continue higher would be 1538-1545.

In summary — a pullback from this first area should find support in the 1515-1519 area and if that area holds, we should push higher again into weeks end. Additional support is the 1506-1509 area if needed. As long as price is above the lower purple trend line — the uptrend remains intact. Our best take is a pullback into 1515-1519 into Wednesday trade is a consideration. Should that area hold — a target of 1533-1338 would be the next area we are watching.

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."