12th september Gold Trend Analysis

In last night’s website update — gold support was listed at 1833-1843 and the low was 1825 so far— current price is 186. 2nd tier support for today is 1808-1819 is we get another probe lower. Resistance was listed at

Trades — I have no open orders at the moment


London Gold Fix $1,843.00 -$36.50

At least to start today, the gold market doesn’t seem to be garnering lift off renewed Euro zone debt concerns. In fact, fear of a Greek default and signs of conflict within Euro zone leadership also haven’t inspired enough bulls to shift control of the gold market in favor of the upside.

Even fresh new highs in US Treasuries and sharply lower global equity market action has failed to inspired gold bulls this morning and some traders suggest strength in the US dollar might be putting gold off its normal moves. Even more surprising is the fact that gold hasn’t benefited from a supportive article in a mainstream US business paper. However, in the wake of another sharp rise in speculative positioning in the latest COT position report for gold, there is talk that gold is in danger of further corrective action ahead. On the other hand, the bulls in gold can probably count on residual Euro zone debt concerns going forward, especially with EU leaders seemingly in conflict with each other. Some gold traders might be discouraged by the threat of deflation that can sometimes surface in the event that a double dip global recession is widely anticipated. However, with the US economic report slate today mostly empty, it could be difficult to dramatically change the initial macro economic vibe at the start of the new trading week. The Commitments of Traders Futures and Options report as of September 6th for Gold showed Non-Commercial traders were net long 241,504 contracts, an increase of 8,866 contracts. The Commercial traders were net short 285,754 contracts, an increase of 11,297 contracts. The Non-reportable traders were net long 44,249 contracts, an increase of 2,429 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 285,753 contracts. This represents an increase of 11,295 contracts in the net long position held by these traders.

Equity markets in Asia and Europe were weaker during overnight trading, early indications as areUS equity markets as the Dow. After being down 160 points — the Dow recovered to unchanged and now down again 100 points. The US Dollar is moderately stronger against most of the major currencies this morning, although posting a loss versus the Yen. G7 Finance Ministers in Marseille over the weekend agreed to coordinate their response to the global economic slowdown but the trade continues to fear a lack of coordination from the G7 and ECB. The Chinese Trade surplus during August was $17.76 billion, lower than market forecasts.

Going to the Charts

The chart pattern in gold continues to favor the pullback scenario on the short term is still in play. The lows of the past few days are just above the lower dotted trend line in the July channel. The 1811 to 1836 area is the most important price point. On the downside the 1811 area is an important support area at the moment. A close below that area would continue to suggest pressure on the downside and open up trade under 1800. On the upside — price needs to maintain above that 1837 area and that lower trend line. At the moment — price is running into resistance there this morning since the lows. The 1855 area is also a point where price needs to close above to suggest that short term upside has potential. Finally, as was the case last week — the 1870-1875 area remains a key price point that offers resistance that needs to be overcome.

Short term weaker cycles are due to end between today and the 14th of the month, but we must see price react before feeling more comfortable with that scenario.

In summary — the Europe situation remains critical with the debt situation. It seems that last weeks intervention in the gold market has left the trade reluctant to take short term positions at the moment and the wide swings and ranges make trading risky. It still seems the downside has the slight advantage on the short term but the trend has not yet broken down below the lower channel line on the chart. That 1811-1837 is where the battle for control seems to be most important and the risk at the moment still seems to be on the downside.

President Obama is due to appear on again today as he is pushing another 447 billion dollar stimulus — and the situation remains another public show to pressure conservatives — where he will march teachers and firemen on with him to plead for more SPENDING.



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"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."