17th january Gold Trend Analysis

London Gold Fix $1,662.00 +$20.00


I am short gold at 1660 —– stop is at 1670.60 basis FEB intra day ( changed stop from last nights 1669)

I am long silver at 28.63 —– stop is at 29.25 intra day basis march ( changed stop from last nights 29.02)


With a huge range up extension to start today, February gold has reached the December 13th levels. Not surprisingly, gold has at least partially tied its wagon to equities and to what appears to be a positive global macro economic vibe.

Certainly gold saw the Chinese and German data overnight as supportive and more importantly that data seems to have put last week’s European downgrades back on the back burner—SO FAR. While gold hasn’t paid that much attention to supply side news lately, the market might draw some support from news overnight of another decline in South African gold production for the month of November. South African gold production in November reportedly declined by 4.5% versus the prior November tally but that news might be partially offset by Gold Fields Mineral Services prediction that world gold production in 2011 probably rose by 2%.

However, with the gold market also seeing fresh predictions that China would overtake India early this year as the world’s largest consumer of gold, it is possible that any negative supply side issues in gold will be mostly discounted. Some traders think a change in Indian gold and silver import duties might be seen as a negative, but with the strong initial pulse up in gold prices to start today it would appear that the negatives are being brushed aside.

Equity markets in Asia were higher overnight off Chinese data that seemed to clear the way for fresh easing but also suggested that the Chinese economy was still generally holding together. European equity markets were also higher early, as very favorable German ZEW readings and decent Spanish auction results provided the markets with enough optimism to countervail the European downgrades from S&P late last week. The US Dollar has started out weaker against the euro and the Greenback was also generally weaker against most of the actively traded majors. In looking ahead, the US markets will see an Empire State Manufacturing reading this morning and expectations generally call for a minor rise in that report. In the end, the precious metals markets were seeing generally supportive action in equities and also from a long list of commodity markets.

Going to the chart
Gold has moved to the upper portion of resistance to start the week. Gold is leaving its options open as to direction for this week, but we’re at the turn point for trend. Any move above 1670.60 favors higher this week. If we close above 1663-1666 it would also favor higher. Thus I shorted last night as a speculation we’re seeing the high and the move down is about to begin. IF not, the stop is a tight one and if we get the close higher, i will look for a setup to go long if I get stopped out. Any close inside the green arc will favor higher. The key today will be that red Gann line that price has now drifted under and that green arc. If we close above 1666, it will favor a move higher this week towards 1700.
Resistance for the remainder of today is 1659-1665 and first support is the 1646-1651 area. The short term trend is still up — and if the green arc can’t stop gold here, we’ll favor a move up to the 1695-1700 area later this week. The battle today is this 1659-1665 area on the upside. In summary — the short term trend is still up and has not yet turned down. If the metals are going to peak and move lower on the short term, this is the most likely time and price right here. Moves above 1670.50 basis February will suggest 1700.



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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."