20th April Gold Trend Analysis

In last nights website update resistance was listed at 1508-1516 and the high so far is 1509. Support was listed at 1483-1489 and the low so far is 1500.

London Gold Fix $1507.00 +$2.00

With the US Dollar coming under noted selling pressure overnight, investors and traders bid up gold but the 1509 area has provided capping to gold’s gains. So far three attempts at the 1509 area have been attempted and rejected in each of the major sessions.

In order to stem inflation in China, and reverse the trend back to the USA, Bloomberg is reporting rumors that a potential revaluation of the Yuan might be in store for this weekend.

Strength in global equity markets doesn’t appear to be discouraging safe haven buying interest in gold so far — but maybe tempering it a bit. Ongoing gains in energy prices overnight might be another issue serving to push money toward gold, as more new highs in crude oil and gasoline prices ahead is expected to contribute to inflation fears.

While gold hasn’t paid that much attention to supply side news lately, the market did see evidence of a 2% decline in African Barrick gold 1st quarter output, when compared to year ago figures. However, the gold market overnight also saw news of an increase in quarterly gold production from a Russian gold miner.

Japanese officials have stated that an evacuation zone around the Fukushima power plant will now become a “no-go” zone. The German business climate during April came in at 110.4, in lime with expectations. UK Retail Sales during March were up 0.2%, higher than forecasts.

Going to the Charts:

An hourly gold chart shows price has just about reached the upper purple channel line.

Since the lows on the chart, price has risen in three main waves — from 1380 to 1450 = 70 dollars —- from 1410 to 1475 = 65 dollars —- and from 1445 to 1510 = 65 dollars. So the potential to begin a pullback near this area should not be discounted. The overall trend remains up — but price is certainly at the upper end of this week’s resistance area and price has traveled almost 70 dollars since the last mini pullback. Resistance for the remainder of the day is the 1509-1515 area (the upper purple trend line). Support is the 1489-1494 level on any pullback going into Friday morning.

In summary — the short term trend REMAINS up — but price is at the upper end of the range and the potential for a pullback or consolidation to develop between the 1509-1515 area is a consideration as we move into Friday morning. This area near the upper purple line could provide the highs for this week. However, The US DOLLAR REMAINS VERY WEAK –(at a 40 year low against the swiss) – and with the revalue rumor of the Yuan — any consolidation into Friday morning — may not be that hard. The overall trend remains up but with the long weekend approaching — volumes will get thinner and thinner.

by Bill Downey

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