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28th April Gold Trend Analysis

Gold at all time high – again!

In last nights website update resistance was listed at 1536-1540 and the high so far today is 1534.50 —— support was listed at 1512-1522 and the low so far today is 1525.80

London Gold Fix $1531.00 +$23.00

With another round of new all time highs posted overnight, the gold trade comes into the Thursday US trade with a bullish bias. In addition to a steady but dovish stance at the US Fed, the gold trade is also benefiting from a sharp range down extension in the US Dollar. With all the focus on US monetary policy this week, the gold market seems to have drifted away from the focus on the precarious US debt situation but that issue could still be contributing to the latest rise to new all time highs.

With the Treasury markets depicting inflationary concerns in the overnight action of the yield curve, it is possible that favorable US economic readings this morning will simply stoke inflation fears, as the Fed has made it clear that QE2 will run its full course and that the US might not change policy for another 2 or 3 Fed meetings.

While equity markets in Asia were mixed during overnight trading, stock indices in Europe are generally higher this morning. US equity markets are open today’s session with slight gains. The Dollar is weaker against most of the major currencies during overnight trading. The Bank of Japan kept Japanese rates unchanged at today’s meeting, but lowered growth forecasts due in main part to the effects of last month’s earthquake. China’s population rose to 1.34 billion people during 2010, nearly half of which now live in urban areas. Japanese CPI during March was down 0.1% year-on-year, a smaller decline than expectations. Japanese Industrial Production during March was down 15.3%, weaker than projections and a huge one-month decline. The German Unemployment during April was 7.1%, unchanged from last month but higher than expectations. Major US economic numbers to be released this morning include Weekly Jobless Claims (more than expected) and 1st quarter GDP (UP 1.8%)

The last leg of the Treasury’s monthly refunding, the 7-year note auction, will have results announced at 12:00 PM. In addition, Fed Regional President Lockhart and Fed Governor Duke will speak during the session.

Going to the Gold chart:

Price has reached the upper purple channel line and this area could provide resistance for today.  Regardless,  the trend still remains up.  If we look at the end of month and beginning of month on a daily price chart — we see Sept, Oct, Nov, Dec, Feb, March, and April displays strong moves in gold.   January was the only exception.  This trend –along with short term cycles all favor higher prices into the first week of May –and that has been, and continues to be the favored outlook.

Resistance for the remainder of the day is the 1536-1540 area and support is the 1518-1525 area.

In summary — favor higher prices.   The potential to break above the upper purple line (like silver did) and move towards the 1550-1575 area is a consideration should price continue higher.  This end of Month and beginning of new month has been a strong period for the metals — and that should be favored.   Any Pullbacks on Friday near 1518-1525 should provide initial support.

by Bill Downey

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Thoughts
"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."