April 14th – Gold Trends Analysis

In last nights website update resistance was listed at 1462-1468 and the high so far today was 1464. Support was listed at 1441-1447 and the low so far is 1452.

London Gold Fix $1458.00 -$.25

While the Dollar managed a fresh new low at 74.60 overnight, it did manage to reject that initial slide and has bounced back to 75. That initial weakness gave gold a positive start to the Thursday trade. By time the London sessions arrived, gold peaked and might have been held back by ongoing fears that the Chinese might tighten again through bank rate requirements. Price traded from the highs at 1464 down to the lows by 7am EST time — about an hour before New York opened.

Overnight news that Vietnam was poised to halt unofficial trading in gold and news that South African gold production in February was down by 2.3% versus last year counterd the pullback and kept gold above 1450. Oz minerals posted a decline in quarterly gold production and that might have lent support as well.

In Thursday action gold got a boost from higher US PPI readings but the potential supportive impact from that report was partially offset by increases in weekly US claims figures back over 400K.

In the early action today in New York, gold is moving back up towards the highs of the day and the US Dollar is trading just under 75. While equity markets in Asia were mixed during overnight trading, stock indices in Europe are generally weaker this morning and the US stock market opened today’s session with moderate losses as the S&P is testing the 50 day average above and below it.

The Chinese Premier said that his nation should make the yuan more flexible to dampen price rises driven by imported inflation. An ECB official stated that any move by Greece to restructure their debt could have catastrophic effects on their banks and on their economy. The Swiss commodities trading firm Glencore officially announced that they will raise up to $12 billion with an IPO, listing their shares in London and in Hong Kong. Major US economic numbers released this morning include Weekly Jobless Claims (over 400K) and the March Producer Price Index (up .7%) The last leg of the Treasury’s monthly refunding, the 30-Year Bond auction, will have results announced at :00 PM EST.

Going to the gold chart — This weeks low was an exact test of the 1444 KEY price point we have been focused on for the past few weeks. That low held and price has been establishing support at the upper red line since the Tuesday low. Since then there have been 3 PROBES of that red line and each test has held. The 8:30 am est PPI report put in the morning low right at that red line —- and price has moved up 10-12 dollars going into the 10am est period.

We’ve discussed the 1468-1470 area as the key point to watch this week on the upside — and that number remains as the key target today. That is the resistance area that gold needs to get above in order to increase upside potential for Friday. With the G-7 (not G-20) meeting in New York to discuss monetary policy, it is possible that gold is being capped in the 1465-1470 area. Day traders can look at this area for initial resistance and where gold might put in a high today — but the overall trend shows that gold has held the key 1444 area this week — and as long as that red line holds — the bulls still have the advantage and would be favored to continue higher on a close above that resistance.

In summary — gold has caught a bid back to 1466 on debt concerns from Greece and Portugal, lower output reports in mine production, a higher PPI reading in USA. KEY PRICE POINT resistance FOR TODAY is the 1468-1470 area. A close above that area would be suggestive that higher gold prices still have the advantage. Support is the RED LINE near 1453 — as long as price is above that area — the trend remains up. With G-7 meeting in Washington — there might be capping attempts at this 1465-1470 area — and day traders can keep that in mind. Swing traders are long and as long as price remains above the red line —-the trend is up.

by Bill Downey

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