July 11th Gold Trend Analysis

In last nights update initial resistance was listed at 1548-1553 and the high so far today is 1556.50 —there is 2nd tier resistance at 1559-1562 for Monday. Support was listed at 1534-1538 and the low so far is 1542.

TRADES: I have no short term positions this morning in gold or silver. Looking for a good setup.


London Gold Fix $1,543.50 +$17.50 LME

With the markets still tossing around concern for the pace of the US economy and the outcome of the US debt ceiling debate, there appears to be a generally conducive overall environment for gold prices to start the week. President Obama will be speaking “again” today at 11 am est on the budget. Anyone else but me notice his hair turning Grey ? The deadlock over deficits is escalating so scare tactics should be coming into play. The hard line — no tax increases from the Reps — no cuts without them from the Dems. The Rep debt plan — cut 2.3 trillion. Dems are crying foul.

The European press seems to be focused in on the potential for more knock on Euro zone debt trouble from the Italian economy this morning and that has increased the concern toward the Euro zone debt crisis all over again. Stocks are down 3% in Euroland and the EURO is down 200 PIPS. The Italian economy is the 3rd largest and contagion fears — with debt to GDP at 120% —- the Govt is bickering over a 40 billion Euro austerity cut into 2014. Italy is the 3rd largest bond market in the world…………… and there’s a lot of rollover coming.

With the market also seeing signs of hotter than expected Chinese CPI readings over the weekend, there would seem to be a number of bullish themes in place to start the new trading week.
The gold market also saw supportive press coverage overnight that fostered ongoing expectations of central bank gold buying ahead and there was also a minor supply side glitch from last week that continued to halt gold output at a South African mining facility. With gold jumping up to a new level priced in Euros this morning, that is probably lending gold futures support because of the headline coverage that news has created this morning. At least in the near term, gold seems to be capable of benefiting from fears of soverign debt and default potentials. With a number of commodity markets being held back by the slowing vibe today, and with a higher dollar, it makes the gold move that much more impressive. Grains are down, Crude is down……….stocks are down. Gold is up.

“Darth” has been pointing out for a few weeks that the melt up scenario from 1979 in gold is picking up steam and gaining traction. In other words — if there’s a 2008 panic —- will the move be to gold this time? It was last week and into this morning.

While equity markets in Asia were mixed during the overnight session, stock indices in Europe got crushed this morning. US equity markets are open with 125-150 point losses this morning as well. The US Dollar is stronger against most of the major currencies. EU Finance Ministers are holding an emergency meeting today to discuss problems with Greece and Italy. Chinese CPI during June was up 6.4% year-on-year, higher than expectations. The Chinese Trade surplus during June was $22.3 billion, higher than forecasts.

THE US EMBASSY IS UNDER SIEGE IN SYRIA as is the French Embassy as the middle east escalation continues. IN SUMMARY — the gold market is showing the ONLY safe haven today as money flows are into gold and the US Dollar this morning.

Going to the Chart

We discussed on the website the awesome gold strength exhibited last week and that has continued into today. RESISTANCE IS THE 1558-1562 area and a close above 1560 would favor 1575-1607 on the upside. SUPPORT could be as high as the 1540 where the apex of the dotted triangle resides today. Additional support is the 1525-1535 area on a daily and potentially WEEKLY basis now. As discussed last night — we favor higher into the Tuesday/Wednesday timeframe. The lower PURPLE line is the most important resistance near 1560. A close above 1562 would be suggestive that gold is going to register new highs in the 1580-1607 area this week.

IN SUMMARY – the 1558-1562 area is the spot to watch today. Markets are becoming unglued worldwide —- and at the moment — gold is the “go to” market. Be careful near 1560 —– IF GOLD decides to pullback with everything else, it should be from this 1558-1562 area. A close above 1562 favors higher into 1575-1600. Support is 1538-1542 for the rest of the day — and resistance is 1559-1562. —WATCH 1558-1562 AS THE KEY ZONE today. Be careful — RESISTANCE SHOULD BE 1558-1562 for today.

President Obama speaks at 11 am est —- on the debt stalemate in USA.

by Bill Downey

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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."