June 22nd Gold Trend Analysis

IN last nights website update resistance was listed at 1551-1556 and the high so far today is 1556.40 (spot Forex) Support was listed at 1531-1537 and the low so far today is 1541

TRADES: I’m currently long 1/2 position (1 contract) at 1526 in gold. I’m moving my stop up to 1526 STOP CLOSE ONLY.


London Gold Fix $1,546.00 +$3.00

The gold market saw a large measure of support over the last two trading session’s off the situation in Greece and in the wake of the Confidence Vote last night, the situation means more bailouts.

The focus of the trade clearly turns toward the FOMC meeting and subsequent press conference and the gold market seems to have capital invested in the expectation for additional easing measures from the Fed in the meeting today. The gold market may have gotten a lift from predictions of strong Indian gold and silver import data for last month, and that news could serve as an underpin for prices going forward. Traders should note that India is an economy heavily weighed toward agriculture and with very high commodity prices and huge stocks of many commodities being held inside India, a large portion of the Indian economy might have significant purchasing power. Recently the gold market hasn’t exactly focused in on soaring investment demand, with the gold market instead seeing its attention oscillate between US debt rating concerns, Greek troubles and at times on the weakness in the Dollar.

While the gold market doesn’t seem to be overly interested in wage negotiations at a South African platinum mine, there is always the potential that a wage increase in one area, could prompt workers in another area to push for a wage increase. The FOMC statement and Press conference from the Fed today should be a market impacting event.

The Greek Parliament passed a vote of confidence on the current government by a margin of 155 to 143. A Chinese state organization predicted that inflation levels in that nation would rise during June, but would then moderate during the second half of 2011. Euro zone Industrial Orders during April were up 0.7%, lower than forecasts. A survey of French manufacturing sentiment during June rose to 109.0, higher than market expectations. The Feds Open Market Committee will conclude their two-day meeting today, with any changes to US monetary policy announced at 12:30 PM EST. Fed Chairman Bernanke’s post-FOMC meeting press conference will start at 2:15 PM EST.

Going to the Charts:

Gold finally moved above the dotted down trend line and has moved to the the 78% retrace area — which should be the last resistance until the 1570-1590 area. With the FED minutes and Bernanke meeting today the potential for volitility is certainly a consideration. Gold may be sensing that Bernanke will not touch rates due to the weak economic conditions and will continue to support the markets. The key will be if gold can close above the 1555 area. If it does then the short term uptrend will still be in play. Resistance for the remainder of the day is the 1558-1566 area and support is the 1533-1537 zone. While today can certainly be a high point as its mid week Wednesday and with silver lagging pretty hard — one can make a case to take profits at this area. However — from my own standpoint — I have already reduced my holding to 1 contract and I’m going to stay with it untl gold reverses…….and that certainly can happen.

IN summary — the short term trend remains up. IT takes a close below 1526 to turn the trend down. IT’s best to be prepared for some potential volitility when the meeting arrives. As long as price is going up on the chart — I’ll continue to favor the upside. The one nagging factor is silver has not reacted up today —- and that leaves some concern — but we have to go with price until proven otherwise.

by Bill Downey

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