June 16th Gold Trend Analysis

In last nights website update resistance was listed in gold at 1535-1542 and the high so far today is 1533 —- support was listed at 1505-1513 and the low so far is 1523.80

TRADES: Currently long at 1530 and 1526 basis August — INTRA DAY Stops now set at 1508. Market CAN STILL GO EITHER WAY — the failure to move above 1533 continues to cast risk on this trade — AND DANGER grows that price can still buckle lower. TODAYS failure at 1533 was a disappointment. BE VERY CAREFUL. — It looks like showdown time today.

CME News

London Gold Fix $1,525.00 +$7.25

While gold prices seemed to forge some upside action yesterday off the uncertainty in the US economy yesterday, others were simply impressed with gold’s ability to hold together in the face of weakness in a broad cross section of commodity markets yesterday. Perhaps the gold market was partially undermined by news of rising Chinese gold production from the first four months of 2011, but that negative impact could be partially countervailed by news overnight that Russian gold and $$$ reached up to the highest level in almost 3 years. News that the Russian central bank has generally been building its gold and $$$ base in each of the prior two years might also cushion the gold market against what appears to be a pattern of weakness in a host of commodity markets. At least at times yesterday, the gold market seemed to benefit from evidence of slowing in the US economy, but initial expectations for the scheduled data today wouldn’t seem to give a definitive signal on the direction of the US economy.
More than likely, gold and the markets are ready to move ONE WAY OR ANOTHER from the Greek debt crisis, especially since the Euro has started the Thursday US trade off on a slightly weaker footing. However, a stronger Dollar probably countervails some of the move to quality lift for gold off the ongoing Euro zone debt saga.

While equity markets in Asia and Europe are generally weaker during the overnight session, US equity markets opened at unchanged levels. The US Dollar is higher against most of the major currencies this morning, although posting a loss versus the Yen. The Prime Minister of Greece will reshuffle his cabinet and pursue a vote of confidence in order to pass new austerity measures as part of a potential new aid package for his nation. The gov’t in Japan may raise corporate and income taxes to repay government bonds used for funding post-earthquake reconstruction. Euro zone CPI during May was up 2.7%, in line with market forecasts. UK Retail Sales during May were down 1.4%, weaker than expectations. Major US economic numbers released this morning include Weekly Jobless Claims which was better than expected and May Housing Starts had increased permit requests, and the Philadelphia Fed’s survey of US Business Conditions during June at 9:00 AM.

Going to the charts:

This market can go either way still —- as the 1533 area is STILL resistance — and this mornings attempt so far has not been able to move above that level. Unless it does so very soon — a move lower can still take hold. With the debt situation in Europe — one would think higher — but anything can happen today with the nervousness in the market. THE THREE PRICE PROBES down under the purple channel that were reversed back up now has price right on the channel line. We don’t think the market can hold another probe lower —- and a break of 1510 would begin to target either the 1485-1489 area or the 1501-1506 zone. THE LOWER channel lline is barely holding.

RESISTANCE IS 1533-1536 area —- and then the 1540-1545 area. Traders are selling both area’s still —- while the bull’s are trying to hold the channel line and are buying 1519-1520. A BREAK BELOW 1518 will target the lows of this week in the 1510-1513 area.

IN SUMMARY — PRICE CAN STILL GO EITHER WAY —- we need a close above 1533 at a minimum. Price can still give way here —— and it could be hard if it does. BE CAREFUL.

by Bill Downey

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