31st October Gold Trend Analysis

In last nights website update — resistance for gold was listed at 1748-1757 and the high so far today was 1745. First support listed was broken and our 2nd tier support was listed at 1693-1705 and the low so far today was 1704.

Trades —

Was short at 1741 basis spot gold —- bought back 1/2 at 1735 and 1/2 at 1709 for a total gain of 38 dollars per oz —- or average of 19 dollars per contract.

The silver buy order posted on the website last night is still in play.


Just out — MF Global finance files for Bankrupcy.

London Gold Fix $1,718.00 -17.00

The gold market has started the new week off under pressure, as the Bank of Japan intervened in the markets by selling large amounts of the Japanese Yen overnight. In addition risk-off mentality has returned in the wake of renewed Euro zone sovereign debt fears as further as Italian and Spain 10 year rates are just under 6% this morning and discussions are still going on how the whole Euro bailout will go forward. With the press also fanning concerns of global slowing off the latest deterioration in the Euro zone affairs, it is possible that markets like gold might discount regularly scheduled US data early this week.

However, the market might garner some support from hopes of additional quantitative easing from the Fed later this week and it is also possible that gold might eventually see some support from hope of assistance from the G20 meeting next weekend. The ECU leaders are saying that G20 nations must also assist in the bailout. We don’t see how the FOMC and G20 meetings can get thru this week without additional statements of easing and bailout support.

The dollar is showing some strength this morning and that is another undermine for gold and commodity markets. While the gold market saw a minor rise in Harmony gold production overnight, supply side news hasn’t been a primary driving force for gold prices lately. With the weaker action in gold this morning, it would seem like gold is so far a bit unsettled in the goings on in with intervention and the Euro situation.

Finally, we discussed on the web last night that the last trading day of the month can sometimes be a wide range affair as the squaring of books to close out October takes place.

In another potentially undermining development, Indian Dawali Fest has gold demand a little softer than expected and that is likely to add to the uncertainty this morning. While equity markets in Asia and Europe were generally lower during overnight trading, US equity markets are open with sizable losses also. The US Dollar is stronger against most of the major’s this morning. Japanese Housing Starts during September were down 10.8%, much weaker than expectations. German Retail Sales during September were up 0.4%, lower than forecasts.

Going to the chart

(NOTE — gold chart analysis is after the silver commentary)



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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."