23th january Gold Trend Analysis

In last nights website update, resistance was listed at 1672-1682 and the high so far was 1677 — Support was listed at 1650-1655 and the low so far is 1662.


Long Gold from 1650 —– use stop listed on website.

Long Silver from 28.63 —


London Gold Fix $1,675.00 +$29.00

Equity markets are somewhat mixed to start the new trading week, but market action so far has been supportive for gold prices. While most of Asia was closed for New Year festivity, the markets were cheered by news that Chinese steel production in 2011 reached new higher levels for the most recently completed year, as that news could leave the impact from China, supportive for many commodity markets despite their markets being closed.

Gold reached our first resistance on the charts and might be held back at this area by news of no deal yet with Greek creditors on restructuring debt obligations. In addition, options expiration on the 26th and the Fed meeting probably has the market not wanting to get to far ahead in price until the FOMC Fed statement. What some may have not noticed is the Euro has generally remained in favor since last weeks open and has moved up 400 pips from its low. Gold and the Euro have been following each other since last week and the US dollar meanwhile, has drifted from a high on the chart of near 81.50 — to under 80 this morning.

One might have expected gold to be held back this morning by suggestions from the Bundesbank, that growth might have stalled slightly in the 4th quarter of 2011, but apparently that news was largely discounted in the face of a fresh upside move on the gold charts overnight.

It is possible that the EU embargo of Iran and ultimate confidence of some type of Greek debt solution and the agreed oil embargo that starts in July is assisting gold prices this morning.

In other news

Australian equity markets were generally weaker overnight, but many Asian markets were closed due to Chinese New Year. Apparently Australian and other equity markets were somewhat undermined due to a lack of an agreement from Greek creditor negotiations over the weekend. While the EU announced an Embargo on Iranian oil exports starting on July 1st, the trade didn’t seem to garner too much direction from that development, but it should be noted that crude oil prices seemed to regain some footing in the wake of that news. The markets did see minimally positive Spanish growth readings for all of 2011 and a prediction of a 1.5% 2012 growth rate from the Spanish central bank this morning.

The US Dollar has started out weaker against the euro and it was also down against most of the actively traded major’s. In looking ahead, there will be a US State of the Union address, an FOMC meeting later this week, and options expiration on the 26th with US economic data reports not really an impact until durable goods are released later in the week.

Going to the chart

Gold’s upside remains intact on the short term but we’ve reached the first weekly resistance level at 1677-1682 — and we should expect hesitation here — and even to the point of being careful here. The 1680 area is one of two targets for this week — and it takes a close above this area to keep the upside going toward 1700.With FOMC meeting, and options expiration on the 26th, gold should hold at resistance today. The Short term cycles are due to peak between now and 7 AM NY time on Thursday morning and usher in a pullback. So we should expect the market to run into resistance either here at 1680 — or the 1712-1722 zone. Those are the two most likely points for a high this week.

The trend is still up but as you can see, this resistance is also from the Sept 2011 downtrend line and that also serves as resistance. Look how gold acted the other two times this resistance line was tested. Gold spent the latter part of a week testing the line on both occasions. Thus we SHOULD expect this line to hold gold here in the 1680-1683 area at least into tomorrow. First pullback support today is the 1664-1666 area. On a weekly basis, first support is the 1650-1655 area. In summary — the trend is still up — we should see resistance today at 1680-1683. If there is a dip here the 1651-1655 area should be first support.



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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."