6th december Gold Trend Analysis

In last nights website update, Gold resistance was listed at 1727-1737 and the high was 1725. First Support was listed at 1712-1716 and 2nd tier was listed at 1697-1701 and the low so far today is 1701.

Long Gold 1738 and 1725 — stopped out at 1711

London Gold Fix $1,720.00 -$22.00

After mostly failing to garner some lift from the initial “risk-on” environment yesterday morning, gold prices closed very weak, and that suggested that gold remained somewhat suspicious of a forthcoming solution to the EU debt crisis.

Ever since the announcement of a potential downgrade to Europe by S&P, Gold has fallen into a very weak disposition. Today’s added comment that the bailout fund itself could get downgraded was interestingly stated after gold had held important support last night and have actually moved back up the the 1720’s. Since that event, gold has been taken down to 1700 in spot.

The US Treasury Secretary will hold a press conference at 11 am EST today as he is meeting with the Finance Minister this morning right now. The situation in Europe and gravity of the situation was revealed last week when the central bank intervention and as “Darth” commented on yesterday — hearing a Feb official use the words “Liquidity Trap” emphasizes how grave the situation is. In addition, the geopolitical situation in Iran is an issue to Europe as a lot of their oil comes from Iran. Certainly the situation is dangerous but it is hard not to speculate that gold is being helped lower and the US stock market is being propped up. As trader Dan pointed out in his latest update — “All eyes in gold are on Europe for the time being as its fortunes are tied to developments there. If the European ministers meeting in Brussels this coming Friday come up with a plan that assuages fears of investors/traders in regards to the sovereign debt crisis there, gold should extend to the upside as the market will move towards the risk trades again. If they disappoint, gold is going to be fighting some very strong headwinds as the Dollar will rally and possibly take out strong resistance near the 80 level on the USDX.” While equity markets in Asia and Europe were generally lower during overnight trading, early indications are that the US markets will open with moderate gains today. The US Dollar is slightly stronger against most of the major’s this morning. S&P warned that 15 nations in the Euro zone could face downgrade if EU leaders do not reach a substantive agreement to resolve their debt crisis by this weekend’s summit meeting. Australia’s Central Bank cut their benchmark interest rates by 0.25% today. Euro zone GDP during the third quarter was up 0.2%, in line with forecasts.

GOing to the charts

Gold pressure has been strong ever since the open on Monday when gold touched first weekly resistance at the 1755 area. Since then it been downhill as the technicals have been streched here as gold arrives at 1700. The 1697-1701 area is now the key focus of support for today. Should the sell off accelerate, the 1667 zone would be the next support area. The medium term of gold has support in the 1635-1645 area.

The other scenario that might be developing was covered on the website last night as pertains to the Triangle or Wedge that gold has formed on the chart. If this scenario plays out — there will be a false break to the downside that will be reversed. We’ll be keeping an eye on that. In summary, gold remains under pressure and I’m on the sidelines in short term trade until there is a setup that looks favorable. Support for today is 1697-1701 and then 1667-1683 if needed. Resistance is the 1717-1725 area. In summary the trend is very close to turning down and it is possible that the expected turn due the 10th of the month may have arrived early. With the situation mixed, its best to stand aside on the trade until things clear up. A close below 1697 would favor a test of 1667 and potentiall 1635. If we see a set up, we’ll email.



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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."