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28th december Gold Trend Analysis

Last nights website update listed resistance at 1601-1608 and the high so far is 1592 — support was listed at 1576-1582 and the low so far is 1576.

Trades

Long gold at 1597 basis FEB — Stopped out at 1572 this morning

CME NEWS

London Gold Fix $1,584.00 -$23.50

The bulls can’t seem to catch a break as a favorable Italian short term auction hasn’t inspired fresh gold buying overnight or anything positive from Europe. From the overnight action it would also seem that the gold trade is embracing a slight fear of slowing again, which in turn might have been partially inspired by weak data from the Japanese METI.

In retrospect, the gold market is probably seeing some pressure from the somewhat disappointing flow of US scheduled data yesterday, but there are also some traders who think that a long term Italian debt auction later this week could still serve to trip up European psychology. Supportive dollar market action reversed out of nowhere about an hour ago and traders are all scratching their heads as the Euro and Gold plunged. With no news, it’s a good old fashion squeeze as the shorts are taking advantage of low volume putting the pressure on the longs to sell out.

The gold market probably won’t see much of a reaction to the scheduled data flow, as the only data due out today come from weekly chain store sales figures. Some gold bulls have to be disappointed in gold’s inability to benefit from the recent concern off the Iranian threat to restrict oil flow in the wake of any further UN sanctions. Therefore, gold and some commodity markets don’t appear to be overly concerned about an actual halt of oil shipments YET, but the markets do think that oil prices could rise enough, off the Iranian threat, to add to the already existing drag on the global economy. Next week, when everyone returns will be a different story.

In summary, a successful short term Italian debt auction was discounted and shorts are taking advantage of the low volume to squeeze the longs. What is not concerning the market today will be front burner news next week when everyone returns.

Going to the Chart

It’s not like we didn’t discuss that trading the last two weeks in December is usually a time that is best left alone. However, up until two hours ago, my trade was within 3 dollars of entry point. Since that time a low volume squeeze has been applied to the longs in metals this morning. We’ve used the zoom in chart to show the takedown in the last two hours and is nothing more than a squeeze as there was no news at all this morning. With today’s takedown I’m standing aside and doing what I should have done in silver — stay on the sidelines until the trade resumes next week. Support going forward is the 1552-1566 area today and resistance is the 1583-1588 area. In summary the trend remains down. We want to mention that 2 hours ago, the situation was completely different and we’re not sure how much we should put into today’s action with most players away from the market. In summary, the trend remains down. We think today is an exercise in clearing out the longs but this is the market we’re dealing with and there isn’t much we can do about it. With today being mid-week Wednesday, it’s possible we’re putting in the low for the week, but with these thin volumes — its best for me to stand aside.

FRANCAIS ESPANOL ITALIANO CHINESE

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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."