22nd december Gold Trend Analysis

Last nights web update listed resistance at 1616-1628 and the high so far today is 1617 — Supporrt was listed at 1591-1601 and the low so far today is 1597.


CME News

London Gold Fix $1,609.00 -$28.50

Apparently the gold trade isn’t as upbeat toward world conditions this morning as are most global equity markets. Unfortunately for the bull’s in gold, the latest EU maneuver utilizing 3 year instruments produced only fleeting confidence in the ability to aggressive tamp down the Euro zone debt threat. Gold might have been undermined by comments overnight from Japanese official, who suggested that the biggest threat to the Japanese economy was the Euro zone crisis, as Japan has significant deflationary problems and the residual drag from natural disasters, but yet its officials still fear the Euro zone crisis the most!

Tempering the slide in gold is generally higher global equity market action and a minimal slide in the dollar. Since the Euro zone news wire early today was mostly quiet, the gold market is likely to take a little more direction from an extremely active flow of US data. More than likely gold will take the most direction from the US GDP revision (revised down to 1.8%) and perhaps from the US weekly claims report (lowest since April 2008) . Gold might also be seeing some fresh pressure from talk that specific precious metals markets might see some money rotate away in the New Year. Some traders suggest that the aggressive declines in gold prices in September and December have soured some managers, who were dismayed that gold has started to decline in obvious safe haven environments. It is also possible that gold is at least partially undermined due to fresh Fitch ratings warnings toward the US. At least into the start of the Thursday US gold trade, the market looks to track like a commodity market in need of growth assurances from the US data front. Equity markets in Asia were mostly weaker overnight but that action was reportedly forged on extremely thin trade action.

Stocks in Europe were showing modest gains to start the Thursday trade. US markets are open with minimal gains today. The US Dollar was weaker against most of the major currencies to start today but it was losing some ground against the Canadian and Australian dollars. In the overnight action, the markets saw evidence of the largest UK current account deficit ever and it also saw news that Italy’s new leader is set to face a vote on the latest austerity plan. There was also news that Lufthansa was selling its BMI unit to British Airways, while Toyota predicted the prospect of high sales figures for 2012. The scheduled data flow from the US today brings forth weekly claims figures (least since April 2008), a 3rd quarter GDP reading (revised DOWN again) , corporate profits, a Chicago Fed National activity index, sentiment readings, Leading indicators came in up .5% and a reading on mass layoffs. In other words, an extremely active flow of US data will be seen today and that could put the status of the US economy back on display again.

Going to the Chart

The most likely place for a low today is 1595-1601 and today’s low looks to be in place for the day. First RESISTANCE is 1612-1616 and 1626. A new trend or change is due between today and Tuesday morning — so this is the time zone we need to watch. Those of you looking to long can use 1602 Feb gold as a first potential for a low. The 1583-1588 area is also a consideration. Expect volume to be very slow as we close out this week. Friday should be quiet. So the question is does one want to get long or short here — or wait until Monday ? In summary —- the 4 HR chart shows that Gann line as SUPPORT — -Day traders can consider that line for a support near 1602 FEB gold for a trade —– with a stop 1591 FEB GOLD. Target the 1616 area. THIS IS NOT A WEBSITE trade per se. In summary — the trend is down — but we expect this area to hold today as support in the 1595-1601 area. We’re in the trend change window — so this pullback should provide a buy — and if that plays out — a move into early Jan is favored once we bottom.



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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."