April 15th Gold Trends Analysis

In last nights website update resistance was listed at 1480-1488 and the high so far today is 1479.50  — support was listed at 1463-1467 and the low so far today is 1471.30

London Gold Fix $1472.50 +$14.50

The gold market managing a slight new high overnight but is trading in a tight trading range between 1470-1479 so far.

With the Euro zone seeing a rather hot March inflation reading, some might suggest that the Euro zone is caught in a no win — In other words, sovereign debt issues continue to present to the ECB, which in turn would seem to dictate easy money policies, but at the same time the ECB is also seeing signs that inflation could be trending toward a problem and that would seem to dictate a removal of stimulus or liquidity. Given the magnitude of the gains in silver prices over the last 24 hours, it is possible that gold is finding some spillover support from silver.

Countervailing the bullish bias in gold prices this morning is a residual concern that China might move to raise its rate requirements ahead of the weekend, or perhaps over the weekend.  Chinese CPI during March was up 5.4% year-on-year, higher than expectations. Chinese GDP during the first quarter of 2011 was up 9.7% year-on-year, roughly in line with estimates. Chinese Industrial Output during March was up 17.4% year-on-year, higher than forecasts.

Some gold players are suggesting that the lack of aggressive budget reduction efforts from the US is the root issue behind the recovery in gold prices this week. That quadrant of the market also suggests that even the most aggressive budget reductions being offered so far fail to reduce the deficit enough to steer the US away from a credit crisis. Others simply suggest that the lack of austerity by the US will simply contribute to global inflation.

Euro zone inflation during March was up 2.7% year-on-year, in line with forecasts.  THe US March Consumer Price Index came in at .6% —-  Consumer confidence at 69.6 (up slightly) —   Everyone knows inflation is much higher but US Government is able to deliver it — and Wall street swallows it.  (Main Street doesn’t — and neither does the gold market)

Going to today’s chart:

The push back up to new high’s  from gold’s retest this week of 1444 continues to favor the bulls.  Resistance is the 1480-1488 area and then the 1515-1525 zone as we move towards Monday.   Support is the 1457-1463 zone on pullbacks.   As long as price is above the 1444 area —- the trend remains up.  The market remains strong and favors higher prices into next week.

by Bill Downey

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