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15th december Gold Trend Analysis

Last nights website listed resistance at 1587-1612 and the high so far is 1594. Support was listed at 1530-1552 and the low so far is 1564.

Trades — Long Gold Ave 1612 (Ave 1 mini contract) CHANGED FROM LAST NIGHTS TO INTRADAY STOP 1652 basis Feb Gold for TODAY.

(from a trade standpoint — if your looking to exit on resistance, the 1594-1607 area is the place to do it)

CME NEWS

London Gold Fix $1,590.00 -$45.00

While Euro zone fears generally remained in place throughout the overnight news coverage, gold has managed what many are suggesting is a simple short covering bounce. In addition to an ongoing fear that the Euro zone is poised to drag the world back into a recession, gold is also being undermined by a series of “pile-on” type bearish gold price projections from various analysts and talking media heads. Given the weakness in a long list of commodity prices recently, it goes without saying that sentiment in the gold market is growing more fearful of deflation and at the same time, the gold trade is starting to fear even slower global growth ahead. Therefore, the gold market might be set to see some reaction to a somewhat flush flow of US scheduled data today, but it could take a string of stronger than expected data points, to effectively tamp down the slowing vibe that has been ushered into place this week.

In conclusion, gold is another market that has developed a Euro centric focus and it could be difficult to break that link. Some equity markets in Asia were lower for the eighth straight session overnight. Stocks in Europe showed some minor strength to start the Thursday trade. US markets are open with the usual 100 point gain to start the day. The US Dollar was slightly weaker against most of the majors to start this morning but it was making some minor gains versus the Aussie.

In the overnight action, the markets saw signs that the UK economy continues to weaken, with November UK retail sales coming in softer than most expectations. The Euro zone posted declining inflation and declining employment figures. The Euro zone also posted lower December services PMI readings overnight, but those figures weren’t as bad as some expectations. Major US economic data to be released this morning, includes initial and ongoing claims, an Empire state manufacturing report which was higher than expected, Industrial production & capacity Utilization and a Philly Fed Business outlook.

Going to the Chart

Today’s bounce in gold has reached the first area of resistance at 1594 at the first adaptive average. This keeps resistance today at 1594-1613 at these averages. The 1607-1613 area is also where the hourly downtrend line resides. Today looks like a consolidation day with the 1565-1594 area as a most likely range. The overall trend remains down, but a rebound attempt is underway not only in gold but in equities as well. For now we can only treat this as a bounce and the potential for gold to trade lower can’t be eliminated as there is still powerful selling going on.

The longer term charts (not shown) shows the 1530-1548 area as key weekly and monthly support levels. These are the levels we need to hold on a monthly closing basis but they are also important weekly closes.

In summary, today’s action is a consolidation day where price is trying to stop the push lower in the 1560-1565 range and the daily selling pressure comes in around 1594-1607. The downtrend is still strong and the potential for the market to trade lower still has the advantage at the moment. I suspect we’re not done testing the downside. A break yesterday’s low’s by more than 5 dollars would suggest 1520-1540 area. A price failure today in stocks and commodities would add significant angst to traders who are long and could set up the market for another probe lower to clear out more stops.

FRANCAIS ESPANOL ITALIANO CHINESE

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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."