9th september Gold Trend Analysis

In last nights website update

Trades — Short Dec Gold at 1869 — (bought 1/2 back at 1851) – Price currently at 1844 —and I am going to step aside for the weekend and not hold any position– and will cover the remainder of the position here at 1844.


London Gold Fix $1,879.50 +$52.50

The gold market clearly wasn’t undermined by the President’s jobs package offering and that has left gold in a safe haven position and seemingly within relatively close striking distance of the September highs. Surprisingly the gold market didn’t see much reaction in the Asian trade to Chinese Industrial Production readings overnight, which could have provided a measure of economic confidence, as those readings came in close to expectations and they still managed a year over year gain in excess of 13%. Apparently there continues to be a measure of concern toward the Euro zone debt crisis. An emergency G-7 meeting this weekend is taking place to address the debt issues. The ECB announced Juergen Stark has resigned from the executive board listed as personal reasons — but markets feel it is due to disagreements on bond purchases. The Euro just broke 137 on the news and adds to the uncertainty. The DAX is down 200 points. So Europe is front and CENTER on a potential collapse. Credit default swaps on Greek debt is not at 95% default levels. There is so much uncertainty going on that the fragility of the situation is reaching extreme levels. There are talks once again of th D-Mark returning —- so the situation is growing to critical levels once again.

It is also unclear whether or not the US political process will be able to come together quickly on a stimulus deal. The market also seems to remain supported by the lack of news from the US committee, which might be expected to offer some insight on their progress, now that the President’s speech is out of the way.

While equity markets in Asia were mixed during overnight trading, stock indices in Europe are getting crushed this morning. US equity markets are open and have responded to the President’s speech —- down 200 points on the Dow. The US Dollar is stronger against most of the major currencies this morning. President Obama announced a $447 billion jobs plan during a speech in front of a joint session of Congress last night, highlighted by payroll tax cuts. G7 Finance Ministers will meet in Marseille to discuss current global economic problems. Chinese CPI during July was up 6.2% year-on-year, in line with expectations. Chinese Industrial Production during July was up 13.5% year-on-year, slightly below some market forecasts. Japanese GDP during the second quarter was down 0.5%, in line with estimates. German CPI during August was up 2.4% year-on-year, above expectations. French Industrial Production during July was up 1.5%, above forecasts. UK PPI during August was up 6.1% year-on-year, above estimates. The only major US economic number to be released this morning will be July Wholesale Inventories at 10:00 AM EST

Going to the Charts

The gold market has been in a very wide and wild trading range. We’ve been as high as 1886 and as low as 1827 in another wide range affair. The critical situation developing out of Europe — with G-7 meeting in a weekend emergency session — and the announcement by the ECB of an executive member resignation this morning suggests there is disagreement on bailout policy. The entire Euro situation seems to be coming to a head one way or another. From a trading standpoint — this really brings into question whether it is prudent to be holding a short position in gold over the weekend. For me, the risk is too high. With price all over the map — it is hard to gauge which direction the metals will take on the short term. With the intervention we saw this week, it can be lower should there be more of that — but with panic in the air, one can make a case for higher. First support for the remainder of the day is the 1830-1840 area. Resistance is in the 1860-1870 area.

Per the website update last night — 1/2 the short position from 1869 was covered at 1851 —– and gold is trading between 1840-1845 at the moment. With the fear that is in the Euro situation — I do not want to be short over the weekend, regardless of whatever develops. There is too much uncertainty for me. Therefore, from a website update standpoint — I’m covering the remainder of the position here at 1844.

Traders who want to remain short can set a stop at 1851 –(or break even at 1869) – and if the market breaks below 1840 — can look at covering in the 1812-1825 area.

In summary — a lot is on the plate in Europe over the weekend which can move the price of gold. The concerns would seem to favor a higher gold price — but with the intervention boys, one cannot be sure what they have planned for the market. I’ve decided I don’t want to be in either way over the weekend so I’ll step aside for the moment and just book the profit and be happy with that.



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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."