4th january Gold Trend Analysis

Last nights website update listed resistance at 1611-1616 and the high so far today is 1616. Support was listed at 1583-1591 and the low so far today is 1592.


We have orders on silver from last nights website update. We’ll leave them there for today’s session. Still flat in gold, looking for a setup with low risk trade.

London Gold Fix $1,603.00 +$13.00


The gold market has managed to claw out a higher high in the overnight trade, but the market was mostly unable to hold that initial probe upward on the charts. A second probe to resistance at 1614 took place in early New York Trade also.

Some traders think that a return to levels above $1,600 is a technical victory for the bulls, while others think the gold market needs to form support above $1,600 to firm up the bull’s case (GoldTrends agree’s with the latter) Some traders are suggesting that new Indian government regulation, with respect to mandatory hallmarking of gold jewellry, is ultimately positive to gold prices, as that action might provide Indian buyers with added confidence. However, Indian demand trends are likely to drift to a background mode quickly in the wake of the US factory orders report today, especially with concerns toward the Euro zone debt problem mostly remaining off boil. Indeed RENEWED CONCERN for Italian and Spanish bank exposure is back in the new this morning at that has the Euro trade below 130 and Dollar above 80. If that trend remains today, gold should have a hard time above 1616.

While some traders are suggesting that gold has drafted some fresh buying interest recently off renewed Middle East tensions, the focus of the gold seems to remain tied to commodity market fundamentals and that could leave gold prices tethered to the US equity markets. At least to start today, Dollar market action suggests restrictive of gold, but the Factory Orders release is likely to set the tone for most of today’s trade. It came in at 1.8% and that has quelled equities and gold since its release. Equity markets in Asia were weaker overnight. European stocks had the same issue, and US equity markets were mostly mixed to start the new trading session, with a bias to down. The US Dollar is higher also. Overnight the market saw generally favorable Euro zone December services PMI readings and Euro zone inflation readings that were down from the prior month, but still holding at elevated levels.

Going to the Chart

The gold chart shows resistance for the remainder of the day at 1616-1620. We’ve arrived at the mid week Wednesday timeframe and our outlook for a bounce from last week into this timeframe favors to be near it’s peak and sometype of pullback to begin into the ADP numbers on Thursday and then the NFP numbers on Friday morning. That ‘s the current very short term outlook. Either the 1616-1625 area or the 1640-1650 area is the most likely point for a high this week. From a cycles perspective, if we continue to move higher into the 9th of the month, it will keep the overall “cyclical” short term trends down and I’d favor a peak there and then a two week move down. This would play well with the options expiration for FEB but would also play with a low coming in as the Chinese New Year begins. However – we believe it would keep the over all intermeidate term trend down. If we get a pullback that leads into the 9th (plus or minus 72 hours), then we’ll look for a good January move up for 1 or 2 weeks.

For right now, we favor a high in the 1616-1620 area and a pullback is favored to begin leading to a late Thursday or early Friday pullback to support. For the rest of the day support is the 1587-1594 area. If your looking for lower prices into these reports the 1616-1620 area is the spot to watch — with an overhead stop at 1626. If your bullish —pullbacks to the gann support line at 1580-1588 is a consideration.

It looks like gold could spend most of the session in the 1597-1612 area. In summary — The “bounce” has not yet completed. We think the pause into Thursday or Friday morning — could still see support come in on good ADP and NFP numbers and provide impetus into a move into early next week. In summary — the over all trends are still down —- but the bounce from the lows is not over. Today would be the best day for a peak and a pullback into the reports. If they are good, we’ll get one more push into next week and then we’ll look for a peak for 1 to 2 weeks. IF WE GET the pullback into the 9th — then we’ll favor higher prices.



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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."