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June 30th Gold Trend Analysis

In last nights website update resistance was listed at 1516-1525 and the high so far today is 1514 –support was listed at 1501-1506 and the low so far today is 1507

Trades: currently short gold at 1525 with a stop at 1536 STOP CLOSE ONLY

Kitco News

Comex gold and silver futures prices are trading not far from unchanged levels this morning. The Greek debt crisis appears to have stabilized for the moment, which is making for calmer markets but with a bit more investor risk appetite, and that has somewhat limited buying interest in the precious metals. Thursday is the last trading day of the month and of the quarter, so portfolio managers could be more active in position adjustments, which could in turn produce some unexpected market volatility.

CME NEWS

London Gold Fix $1,508.00 +$2.00

Apparently the gold market was happy with the overall outcome of the Greek crisis, as August gold prices to this morning’s high, were up as much as $24 from this week’s low. While the action in the dollar markets hasn’t been a key force in the gold market lately, persistent weakness in the Dollar is providing some support to gold. A close under 73.50-74.00 in the US Dollar would put the short term in Bearish mode.

The gold market appears to be setting its sight on the US debt reduction efforts and whether that results in more US uncertainty and a further drag on a suspect economy. In the mean time, gold seems to be capable of benefiting from a “risk on” mentality, but that line of thinking could be halted in the event that US scheduled data fails to depict growth and or the US equity market comes back under pressure.

In other words, gold continues to behave in need of positive news to continue the bounce effort from this week. Some players might think gold will come back into vogue if talk of a US ratings downgrade becomes more prevalent but that reaction is complicated. Uncertainty might have to be historically significant to overcome the drag expected in commodity markets, if optimism on the economic front dissipates.

At least to start, the US numbers and higher equity market action is in play with end of the quarter dressing.

While equity markets in Asia and Europe are generally higher during the overnight session, US equity markets are open with moderate gains. The US Dollar is weaker against most of the major currencies this morning, although posting a gain versus the Pound. The Greek Parliament is scheduled to vote on the implementation of new austerity measures approved in yesterday’s vote. Japanese Housing Starts during May were up 6.4%, higher than market expectations. Euro zone Inflation during June was up 2.7% year-on-year, in line with market forecasts. German Unemployment during June was 7.0%, in line with expectations. German Retail Sales during May were down 2.8%, lower than forecasts. Major US economic numbers released this morning was Chicago-area manufacturing index came in at 61.2

S&P warned that unless the US raises the debt ceiling they will be downgraded —- and since they have raised it 72 times since 1960 —- it favor they will do so again.

In the debt market, 99 billion dollars worth of debt saw weak demand this week— and rates have risen to levels from a month ago in just a few days as the end of QE2 is here.

Going to the charts

The bounce has reached the lower dotted trend line and price is now pullng back from there. We were looking for a move towards 1519 (a fib retrace number) but so far gold has stalled out at 1513. As long as price is below the upper dotted trend line —- the short term trend remains lower.

SUPPORT FOR THE REST OF THE DAY IS THE 1496-1501 area —- any break below 1490 would suggest that another leg down is underway and would target the 1474-1483 area first. On the upside — resistance is the 1513-1515 area. IF price is really getting rejected at the dotted lines — and breaks the swing low from this week —expect selling to come into the market again. In summary — trade will be winding down for July 4th and volume will very low by Friday and we favor sideways to lower today. ANY BREAK OF 1490 would warn LOWER.

AUG GOLD

A drop under 1492 suggests another leg down in this correction is underway. There is price congestion just over 1505 to 1513 with trade suggesting resistance 1516-1520, but tight sideways congestion persists probably due to a lot of traders and market participants squaring positions and heading out early for the July 4th festivities in USA. IT takes a close over 1536 to reverse short term trends higher and send a run to again to test 1550.

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."