1st November Gold Trend Analysis

In last nights website update gold resistance was listed at 1725-1733 and the high so far is 1724. London Gold Fix $1,702.00 -16.00


I bought 1 silver at 33.60 and one at 32.87 for a total of one position average at 32.24 — stop is 31.30 intra day.

With big weakness in gold prices this morning, in the wake of a surprise twist in the Greek credit crisis, gold is tracking commodity market fundamentals. Furthermore, it would seem like gold and other commodity markets remain very concerned about further slowing in the global economy, the lingering Euro zone turmoil, and the MF Global Bankruptcy that has some traders without a means to trade as their accounts are frozen. MF GLobal news was not in complicance with CME and CFTC regulations — as ther is a discrepancy in Customer accounts —- as a regulartory probe has begun. In other words– did MF GLOBAL use CLIENT FUNDS for its own trading —or is it sloppy accounting ? If they used segregated accounts — its a big deal.

In Europe, the plan looks like it is wobbling as Italian yields are approaching that 6% level. The exposure to Europe on Italian, Portuguse, and Greek debt is a major concern this morning. German stocks were down as much as 6% at the lows. Greece has already defaulted —- its Italy the concern is about. G20 is meeting in France beginning on Wednesday — and the Feds are meeting today and Wednesday.

Some traders are suggesting that intervention action from the BOJ yesterday dealt an initial hit to gold, as that action fueled the dollar higher. However, other traders think that the Japanese intervention could ultimately benefit gold. In the mean time, gold has support at 1667-1681 area. Gold prices will be set to react sharply to the US Fed announcement on Wednesday and we don’t see how they will not support and bail.

A sharp continued rise in the dollar overnight means that gold can expect some residual pressure from the dollar markets. While equity markets in Asia were mixed during overnight trading, stock indices in Europe and USA are in practical crash mode this morning. The US Dollar is stronger against most of the majors this morning. The Feds Open Market Committee will begin a two-day meeting this morning, with an announcement on any changes with US monetary policy at mid-day tomorrow. Yesterday’s Yen intervention by the Bank of Japan was a record high of at least $95 billion. The official Chinese PMI number for October was 50.4, weaker than market expectations. UK GDP during the third quarter was up 0.5%, higher than market forecasts. UK manufacturing during October was 47.4, lower than market projections. Major US economic numbers to be released this morning include; September Construction Spending and US Manufacturing at 10;00 AM EST as well as store sales. The market will also be presented with domestic US auto sales figures around mid session today. Support was taken out and the 1680 area from last week has been reached with a low at 1681.

Going to the chart

Gold has reached the key 1680 area on Tuesday morning —-and a big bounce back to 1700 has taken place. Support for the day is 1667-1680. Today’s drop might have been the low and a bounce to the 1720-1730 area cannot be discounted either. Be ready for anything today. Support is 1667-1683 and resistance is the 1722-1730 area. With the wild swings —– the ranges is as wide as 1680-1730 for today. I’m going to wait to do anything in short term gold position and see how today shakes out before I hop on. That 1680 spike down this morning might very well have been the low for this week. BOTTOM LINE — gold needs to close back above 1730 at a minimum to have the chart favor higher. On the downside — 1667-1680 looks to be solid support at the moment but remain cautious.



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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."