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July 13th Gold Trend Analysis

In last nights website update resistance was listed at 1572-1578 and 2nd TIER resistance at 1588-1593 and the high so far is 1582. Support was listed at 1549-1556 and the low so far is 1564.

TRADES: Long 1 gold at 1566 — with a order to add one at 1556. (stop at 1527)
Long 1 Silver at 35.65 and Long 1 at 35.17 (stop now 34.06)

Current target 1588-1607 in gold ———— 37.60-39.05 in silver

CME NEWS

The gold market overnight seemed to be lifted by Asian talk of fresh stimulus action from the US Feds. With a Fed Chairman testimony begining now, it would appear as if international gold players are tossing around the idea that the US Fed might be getting closer to providing some fresh assistance to the US economy.

With the rise in gold prices this morning, gold appears to have broken its recent inverse relationship with equities perhaps because of a fairly strong Chinese GDP reading overnight bolstered macro economic expectations again. The gold market might also be drafting favorably off talk of strong ongoing gold demand from India because of an expansion of its middle class. The gold market did see a couple bullish brokerage firm price forecasts floated overnight, but gold prices were already rising because of up beat macro economic vibes from China and perhaps because of some minor weakness in the dollar. With the gold trade seemingly benefiting from rumors of fresh easing from the US, the market might parse every word from the Fed Chairman testimony today and that could mean gold could move around a bit … but the trend is up.

While the fresh headline flow from the Euro zone was limited overnight, the gold market appears to be garnering ongoing lift from ideas that further problems will be seen from that front soon. It is also possible that nervousness might begin to flow more significantly from the debt situation in the US, especially if it appears that today’s meetings have resulted in another stalemate. Both seem bullish for gold.

Equity markets in Asia and Euro were generally stronger during the overnight session, US equity markets have moderate gains this morning. The US Dollar is weaker against most of the major currencies, although posting a gain versus the Swiss Franc. A major credit ratings firm has cut Ireland’s sovereign debt rating to “junk” status. Chinese first quarter GDP was up 9.5% year-on-year, roughly in-line with forecasts. Chinese Industrial Production during June was up 15.1% year-on-year, higher than expectations. UK Unemployment Rate during May up 7.7%, in-line with expectations. The second leg of the Treasury’s monthly refunding, a 10-Year Note auction, will have results announced at 12:00 PM.

In addition, Fed Chairman Bernanke will testify in front of a House Committee and Fed Regional Presidents Rosengren and Fisher will also give speeches during the session — it is underway now.

Going to the Chart

Gold is at an all time new high as we hit mid week Wednesday. We are now in day 8 of upside —- a very rare event. Usually there is profit taking that begins on Wednesday afternoon as its mid week Wednesday. Thus if a pullback develops from this area —- it would be normal and would probably last into Thursday. Over all support is now the 1556 area daily and 1533 weekly. The move back into the Purple channel line is bullish — and if we begin supporting in that channel —– a move towards 1600-1620 will be on tap. Resistance for the remainder of the day is 1588-1607 and support is now 1556-1566. In summary — the trend remains up —- watch the 1588-1593 area today.

by Bill Downey

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Thoughts
"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."