April 25th Gold Trend Analysis

Last nights website listed resisstance at 1515-1523 and the high so far today is 1518.20 — support was listed at 1489-1501 and the low so far today is 1510.

The June gold contract has explodedto a fresh new all time high and given the massive range up pulse in silver, it is possible that the action in the silver market contributed to the strength in gold prices this morning. Clearly talk that the Chinese might diversify their foreign holdings into precious metals provided gold with a noted lift this morning, as China continues to have a pronounced impact on a long list of commodity markets. While the Dollar isn’t markedly weaker this morning, significant gains in grain prices and higher oil prices are probably contributing to the inflationary bias in the early Monday morning US trade action. The gold market did see some positive progression from Indian gold price action overnight and the dialogue from the Asian trade was also upbeat. Apparently investors world wide are concerned with the US debt situation and the prospect of gridlock in the negotiations which in turn could bring in a lack of credible budget reduction. Other traders are suggesting that the presence of an upcoming FOMC statement from the dovish leadership of the US Fed is causing pre-buying of gold this morning.  The Commitments of Traders Futures and Options report as of April 19th for Gold showed Non-Commercial traders were net long 251,710 contracts, an increase of 22,817 contracts. The Commercial traders were net short 304,504 contracts, an increase of 21,322 contracts. The Non-reportable traders were net long 52,795 contracts, a decrease of 1,494 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 304,505 contracts. This represents an increase of 21,323 contracts in the net long position held by these traders.

The escalation in the middle east and the potential destabilization is also lending the meatls to trade higher.  This is also putting a bid under metals.

Going to the chart we see gold came within a hair of hitting the upper purple line —– which should be first resistance this week.   The trend remains up ———– resistance is the 1518-1525 area and support is the 1489-1501 area for the remainder of the day.

In summary — the trend is up — but price is near the upper end of the range.   THE FEDS MEET on Tues/Wed so there might be some consolidation near these prices going into Tuesday — but with that said —  the uptrend is still intact.

by Bill Downey

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