May 25
11 PM GMT
CME NEWS
4.00 PM GMT
At least in the early going today, it would seem like concern toward the Greek situation remains in place, but it has been moderated by somewhat up beat French and German Consumer confidence readings. It is also possible that many markets are becoming hopeful of an orderly Greek exit, as equities clawed out initial gains and gold was tracking higher this morning despite news of a poll that showed the extreme leftist party might have gained ground into the coming Greek elections. In other words, the market could have feared a political shift in Greece toward a leadership structure that won't honor prior promises to the EU.
For gold and other commodity prices to see a Greek exit as a positive, they have to think that the exit will not be a sustained disruptive event. Weakness in the Indian currency this week has probably undermined investment interest in gold in that country but that negative could be easily countervailed this morning by suggestions from the Russian Central bank that they planned to buy a "considerable" amount of gold for reserves this year. Unfortunately, the Russian central bank last year only bought 100 tons of gold for reserve and therefore the size of the Russian buy might be a question mark for the gold trade. However, hints of central bank gold buying aren't usually discounted easily.
Gold might also see some minor support in prices off a reduction of gold futures margins overnight. If the reaction to US scheduled data yesterday is an effective guide, the bulls will probably be pulling for some favorable news from the US consumer later this morning………and it did come out a bit better than expected at 79.3Hong Kong shares finished marginally higher last night but that market still saw losses for the week. Mainland China stocks were down for the 3rd straight session, despite some strength in Chinese railway stocks. European equity markets were still showing concern toward the Greek situation as recent polls showing more gains were made among the far leftist party and that in turn seemingly increases the outlook of a Greek exit from the EU. However, some favorable data from France and German consumer confidence overnight seems to have provided a minor boost in economic sentiment in that region and that could help Europe end the week on a less discouraging note. The US markets were showing a plus 40 minus 40 range this morning, as US data this week generally surprised with results that were slightly better than initial expectations. The US economic report slate is rather thin today, with an early speech from the Fed's Plosser in Germany and that will be followed later in the session by a Reuters University of Michigan consumer survey. Consumer sentiment was a bit better than expected at 79.3.The KEY Will be who wants to HOLD on to positions over a three day weekend.
For gold and other commodity prices to see a Greek exit as a positive, they have to think that the exit will not be a sustained disruptive event. Weakness in the Indian currency this week has probably undermined investment interest in gold in that country but that negative could be easily countervailed this morning by suggestions from the Russian Central bank that they planned to buy a "considerable" amount of gold for reserves this year. Unfortunately, the Russian central bank last year only bought 100 tons of gold for reserve and therefore the size of the Russian buy might be a question mark for the gold trade. However, hints of central bank gold buying aren't usually discounted easily.
Gold might also see some minor support in prices off a reduction of gold futures margins overnight. If the reaction to US scheduled data yesterday is an effective guide, the bulls will probably be pulling for some favorable news from the US consumer later this morning………and it did come out a bit better than expected at 79.3Hong Kong shares finished marginally higher last night but that market still saw losses for the week. Mainland China stocks were down for the 3rd straight session, despite some strength in Chinese railway stocks. European equity markets were still showing concern toward the Greek situation as recent polls showing more gains were made among the far leftist party and that in turn seemingly increases the outlook of a Greek exit from the EU. However, some favorable data from France and German consumer confidence overnight seems to have provided a minor boost in economic sentiment in that region and that could help Europe end the week on a less discouraging note. The US markets were showing a plus 40 minus 40 range this morning, as US data this week generally surprised with results that were slightly better than initial expectations. The US economic report slate is rather thin today, with an early speech from the Fed's Plosser in Germany and that will be followed later in the session by a Reuters University of Michigan consumer survey. Consumer sentiment was a bit better than expected at 79.3.The KEY Will be who wants to HOLD on to positions over a three day weekend.
Gold Going to the Chart
The gold chart shows once again price pulled back on early Thursday trade down to the 1551 of support and once news of an extended loan to Greece and news of margin reduction, gold caught a bid and has moved back to our daily resistance of 1566-1576. Resistance for the remainder of the day is the 1572-1578 area and support is the 1551-1557 area for the remainder of the day. The 2012 JAN 2nd YEARLY open range of 1561-1571 has been in play all week. THAT’s THE YEARLY PIVOT and price is working hard to try and get above it from the bulls and the bears are trying to keep it BELOW. Yearly opening prices are very important.
From a chart perspective, it still looks like we have a short term low in place from the short term trend change date for May (May 20th plus or minus 72 hours). So far the lows came in within that window. Gold needs to get above 1580-1585 to relieve short term pressure. With that said, on the downside, the fact that we held the key support at 1547-1551 keeps things alive on the short term as far as this bounce is concerned.
Markets will be winding down after lunch as the holiday kicks in. That would be the time to watch for the control boyz. And that is the concern for me. With markets closed on Monday, I don’t want to be long and be in a position where STOPS are not set and where the control boyz can do what they want. With USA closed on Monday, traders might be reluctant to hold. It’s a two edged sword as we could get some stimulus news, or more breakdown. The TALK is there on stimulus, buts it’s a matter of agreement. If Greece was to exit from the Euro, the most likely announcement time would be on a long weekend. I would think the control boyz would have it set up to have the PLUNGE PROTECTION TEAMS buying up equities and everything else, but that is speculation. Thus I’ve exited 2 of my three contracts and will get out of the 3rd if August gold hits 1575 --- or by the close. I’ll send an email to website subscribers when I exit my last position. I’ll look to re-enter next week. The purple lines on the chart define resistance and support. As you can see, we’ve been stuck in between two channels for the last few days and odds favor we’ll end the day inside this trading band.
In summary, the overall trend remains down, but if gold can move above 1580, then the short term bounce can continue.
From a chart perspective, it still looks like we have a short term low in place from the short term trend change date for May (May 20th plus or minus 72 hours). So far the lows came in within that window. Gold needs to get above 1580-1585 to relieve short term pressure. With that said, on the downside, the fact that we held the key support at 1547-1551 keeps things alive on the short term as far as this bounce is concerned.
Markets will be winding down after lunch as the holiday kicks in. That would be the time to watch for the control boyz. And that is the concern for me. With markets closed on Monday, I don’t want to be long and be in a position where STOPS are not set and where the control boyz can do what they want. With USA closed on Monday, traders might be reluctant to hold. It’s a two edged sword as we could get some stimulus news, or more breakdown. The TALK is there on stimulus, buts it’s a matter of agreement. If Greece was to exit from the Euro, the most likely announcement time would be on a long weekend. I would think the control boyz would have it set up to have the PLUNGE PROTECTION TEAMS buying up equities and everything else, but that is speculation. Thus I’ve exited 2 of my three contracts and will get out of the 3rd if August gold hits 1575 --- or by the close. I’ll send an email to website subscribers when I exit my last position. I’ll look to re-enter next week. The purple lines on the chart define resistance and support. As you can see, we’ve been stuck in between two channels for the last few days and odds favor we’ll end the day inside this trading band.
In summary, the overall trend remains down, but if gold can move above 1580, then the short term bounce can continue.
Have a nice holiday weekend
8.00 AM GMT
The incline seen yesterday stopped in areas below the level of 1582.00, while the metal returned today to trade below the level of 1561.00, where these levels represent 38.2% and 23.6% Fibonacci correction of the Deep Crab harmonic pattern. But still, the pair is stable above the critical barrier of 1529.00. Therefore, gold might provide another bullish attempt today , but this attempt depends on stability above 1561.00 again. Stability below 1529.00 might negate our expectations.
The trading range for today is among the key support at 1510.00 and key resistance now at 1616.00.
The short term trend is to the upside targeting 1945.00 per ounce as far as areas of 1475.00 remain intact with a weekly closing.
Support: 1552.00, 1540.00, 1536.00, 1529.00, 1510.00
Resistance: 1561.00, 1571.00, 1579.00, 1582.00, 1590.00
Resistance: 1561.00, 1571.00, 1579.00, 1582.00, 1590.00
Recommendation Based on the charts and explanations above, our opinion is buying gold with 4-hour closing above 1561.00 targeting 1582.00, 1599.00 and 1608.00 and stop loss with 4-hour closing below 1529.00 might be appropriate
6.00 AM GMT
With the US markets closed on Monday for Memorial Day holiday, it means that anyone holding positions will not have stops working for them. This would be a perfect time for the control boyz to press the downside.
However, it is also a time when the FED and ECB could make some important announcements. Thus there is also the potential of upside moves. It depends on how one measures risk.
If something is not done soon, the downside momentum, once started, will be hard to contain.
Here is one example of rumors that are swirling. In summary, with the markets closed on Monday, it is a strong consideration right now for traders. In this example, it could lift gold higher. In summary, just want to make everyone aware that no trading on Monday means those in USA have no working stops on their positions and gives the control boyz a lot more firing power if they so choose.
However, it is also a time when the FED and ECB could make some important announcements. Thus there is also the potential of upside moves. It depends on how one measures risk.
If something is not done soon, the downside momentum, once started, will be hard to contain.
Here is one example of rumors that are swirling. In summary, with the markets closed on Monday, it is a strong consideration right now for traders. In this example, it could lift gold higher. In summary, just want to make everyone aware that no trading on Monday means those in USA have no working stops on their positions and gives the control boyz a lot more firing power if they so choose.
More on the Greek Banking Calamity
Rumors have been making their way over the wires on Tuesday that the four largest Greek banks will receive € 18 billion in the form of 'EFSF bonds' on Friday in a first tranche of the recapitalization effort that is part of Greece's latest bailout deal. The report was updated several times during the day, until Friday had morphed into 'perhaps Wednesday'. Below is an excerpt of the report as it appeared at Reuters:
Greece's bank stability fund approved an 18 billion euro ($22.96 billion) injection to rescue its four largest banks on Tuesday, and an official said they would get the urgently needed funds as soon Wednesday.
Bankers say the recapitalization will allow them to again receive funding from the European Central Bank (ECB), which cut off some Greek banks last week because they lacked enough capital to be considered solvent.
Huge losses from a sovereign debt swap in March nearly wiped out the capital of Greece's systemically important banks and Greek authorities are scrambling to wrap up a bridge recapitalization to help them cope with a cash crunch.
The Hellenic Financial Stability Fund (HFSF) said it had approved an agreement to release the funds, which will come in the form of notes issued by the euro zone's financial rescue fund, the European Financial Stability Fund (EFSF). The HFSF statement said the deal would be presented to the Greek banks for signing on Wednesday, and an HFSF official said the funds would be released as soon as it was signed. Recapitalizing Greece's limping banks is a vital part of the 130-billion-euro EU and International Monetary Fund bailout Greece agreed in March to stave off national bankruptcy.
But with Greece lacking an elected government after an inconclusive vote on May 6, implementation of the deal is largely on hold. With details of the overall 50-billion euro recapitalization plan for the banks still unresolved due to political deadlock, authorities have come up with an interim solution to keep the four biggest banks afloat until a new government is formed to finish the framework. Greece will hold a repeat election on June 17, and opponents of the March bailout agreement have surged in opinion polls, alarming European leaders who say that if the bailout is rejected at the ballot box Greece could face swift bankruptcy and economic collapse.
Greeks have been withdrawing their funds from banks for months, and the pace has picked up dramatically since the May 6 vote. That has forced Greek banks to cover their funding gaps by tapping liquidity from the ECB and the Greek central bank's more expensive emergency liquidity assistance (ELA) window against collateral. They already had borrowed 73.4 billion euros from the ECB and another 54 billion from the Bank of Greece via ELA, based on the most recent data as of January. Together, the sums translate to about 77 percent of the banking system's household and business deposits, which stood at about 165 billion euros at end-March. Last week the ECB suspended some Greek banks from its funding operations because their capital was too low, forcing them to migrate to higher-cost funding at the Bank of Greece's ELA facility.“
Greece's bank stability fund approved an 18 billion euro ($22.96 billion) injection to rescue its four largest banks on Tuesday, and an official said they would get the urgently needed funds as soon Wednesday.
Bankers say the recapitalization will allow them to again receive funding from the European Central Bank (ECB), which cut off some Greek banks last week because they lacked enough capital to be considered solvent.
Huge losses from a sovereign debt swap in March nearly wiped out the capital of Greece's systemically important banks and Greek authorities are scrambling to wrap up a bridge recapitalization to help them cope with a cash crunch.
The Hellenic Financial Stability Fund (HFSF) said it had approved an agreement to release the funds, which will come in the form of notes issued by the euro zone's financial rescue fund, the European Financial Stability Fund (EFSF). The HFSF statement said the deal would be presented to the Greek banks for signing on Wednesday, and an HFSF official said the funds would be released as soon as it was signed. Recapitalizing Greece's limping banks is a vital part of the 130-billion-euro EU and International Monetary Fund bailout Greece agreed in March to stave off national bankruptcy.
But with Greece lacking an elected government after an inconclusive vote on May 6, implementation of the deal is largely on hold. With details of the overall 50-billion euro recapitalization plan for the banks still unresolved due to political deadlock, authorities have come up with an interim solution to keep the four biggest banks afloat until a new government is formed to finish the framework. Greece will hold a repeat election on June 17, and opponents of the March bailout agreement have surged in opinion polls, alarming European leaders who say that if the bailout is rejected at the ballot box Greece could face swift bankruptcy and economic collapse.
Greeks have been withdrawing their funds from banks for months, and the pace has picked up dramatically since the May 6 vote. That has forced Greek banks to cover their funding gaps by tapping liquidity from the ECB and the Greek central bank's more expensive emergency liquidity assistance (ELA) window against collateral. They already had borrowed 73.4 billion euros from the ECB and another 54 billion from the Bank of Greece via ELA, based on the most recent data as of January. Together, the sums translate to about 77 percent of the banking system's household and business deposits, which stood at about 165 billion euros at end-March. Last week the ECB suspended some Greek banks from its funding operations because their capital was too low, forcing them to migrate to higher-cost funding at the Bank of Greece's ELA facility.“
4.00 AM GMT
Long Term=Up (major resistance 1767-1804 needs to be exceeded on a monthly close)
Medium Term=BEARISH (Major Resistance 1767 Monthly Close) Technically in bearish mode.Intermediate Term= Bearish ( a price close above 1633 will neutralize the downtrend.)
Short Term= Bullish (It takes a close below 1537 flip back to bearish)
Support and Resistance for Friday
Initial Resistance for 1566-1576 and 2nd tier 1587-1597
Initial Support 1542-1551 and 2nd tier 1526-1533
Recap
Gold prices once again were under pressure as price moved from 1576 and got to the 1551 area, right at the higher end of initial support listed last night before a bounce back to 1560 for the close of trading. It was the same for the stock market as it was down 70 at one point in the day, but made up all of the losses.
One of the considerations for traders is that the USA market is closed on Monday for Memorial Day and any long trades will have to be held until Tuesday. The markets know this and so do the control boyz. With the liquidity crisis in Europe, it portends a high risk situation and is something for consideration. Put it this way, it gives the control boyz plenty of room to play with the price.
The other thing going on at the moment is that we're coming up hard on the June delivery month...which is a big delivery month for gold. It's pretty normal at this time for JPMorgan et al to flush out all the weak spec longs prior to first notice day, and that is probably part of what's going on now.
With Greece’s membership in the euro zone teetering, fears of bank insolvency rising and Europe’s leaders bickering about what to do, the euro crisis is once again intensifying and threatening to undermine fragile growth globally.
At a summit meeting in Brussels on Wednesday, regional leaders failed to signal any significant new steps to stimulate the sputtering regional economy or resolve the competing agendas of President François Hollande of France, who favors stronger action to spur growth, and his German counterpart, Chancellor Angela Merkel, who has opposed aggressive moves to ease the pressure on Europe’s weakest economies.
Yet, the urgency for a solution to the region’s debt crisis, now in its third year, may never have been greater.
The CME announced a margin decrease for Gold but I don’t know how much and when at the moment.
Everywhere we look, we see physical fundamentals that should be very bullish for gold yet the price continues to struggle. The chart below shows China continues to buy, buy, and buy as the price goes down, down, down.
On the flip side, the mid east source tells us that physical gold purchases are now being delivered and the premiums have gone back to just about par on spot prices.
What Next?
Last night we favored a consolidation day in the 1547-1580 area and 1551-1576 was the range for the day. Still, Thursday was another odds favored day for a higher close but we are not seeing it. The key now is that dotted blue channel line on the cycles chart earlier in the report. We MUST GET BACK above that 1560-1565 area and fast or this market is going to be exposed to another breakdown on the chart.
The chart below shows the support and resistance area. The moving average at 1566 is offering first resistance but the 1575 purple channel line we listed as resistance was touched on Thursday but failed miserably. Watch the 1547-1555 area on the downside as closing price support on Friday. In summary, gold’s key reversal must NOW HOLD above the TUESDAY low or this market could turn down hard.
With the price pattern now beginning to chop up and down again it becomes the outlook for Friday. Add to that the uncertainty that Friday will have low volume due to the holiday in USA on Monday as traders will exit early. That leaves Monday wide open for the control boyz if they so desire as USA will be closed. A close below 1533-1540 would leave the market in a dangerous situation with downside potential. With the chop down on Monday, and the chop back up into this morning and then back to the 1550 area we are once again in a chop area that is TRENDLESS and dangerous. 
With the price pattern now beginning to chop up and down again it becomes the outlook for Friday. Add to that the uncertainty that Friday will have low volume due to the holiday in USA on Monday as traders will exit early. That leaves Monday wide open for the control boyz if they so desire as USA will be closed. A close below 1533-1540 would leave the market in a dangerous situation with downside potential. With the chop down on Monday, and the chop back up into this morning and then back to the 1550 area we are once again in a chop area that is TRENDLESS and dangerous.
Bottom line
the market continues to not follow the odds that the charts lay out. The most recent hammer failure is yet another in a long string of fake outs that the market keeps handing out. Today’s support has five bounces off the 1550 area and it won’t take much more before it gives way. A close below 1533-1540 has to favor the downside in price direction. With Monday closed in USA it makes a perfect place for the control boyz if they so desire. It also makes it a breeding ground for the Feds or the ECB to announce another arrangement and the only option is more bailout and concessions to a debt that cannot be repaid. Unless they act soon, the situation could get even more dangerous. The USD dollar continues to remain in bullish mode and that means that panic for liquidity remains in play.
May 24
4.00 PM GMT
CME NEWS
Surprisingly gold clawed out some modest gains overnight and it managed that action in the face of weak data from several different regions. In fact, the UK data confirmed a return to recession, Chinese manufacturing data posted a 7 straight month of contraction and the Euro zone also chimed in with soft May Manufacturing PMI readings.
With a weaker Euro mixed to lower equities and gains in metals prices, one could suggest that the markets might be anticipating some type of coordinated easing action. It would seem like the Chinese are already reacting with an announcement overnight of 66 billion yuan allotment for public rental housing construction projects. However, ideas that gold is finding some lift from easing hopes could be put to the test this morning in the wake of a series of critical US scheduled data points, especially since that data is expected to come in on the weak side of unchanged. It is also possible that gold is finding some footing off a growing view that a Greek exit from the Euro zone could be an orderly event. In fact, the Fed's Bullard suggested last night that an orderly Greek exit was possible. Some traders expect to see some increased volatility in gold prices today due to option settlement, while others think that the primary driving force for prices will continue to be the Greece situation.
Chinese shares were under pressure again overnight with more evidence of an extending slowing pattern in Chinese manufacturing seen in the headlines. European equity markets were also showing renewed weakness early this morning in the wake of softer data and that has increased uncertainty and anxiety in that region. However, the European stocks did manage a recovery and that seemed to suggest that some easing effort might be forth coming from the ECB. There also seems to be a growing sense in the markets that a Greek exit from the Euro zone might not be a total disaster, but seeing a distinct softening of the Euro zone economy probably keeps a moderate amount of concern in place. The US report slate today is somewhat active with Durable goods and claims likely to give the trade a minor view on the direction of the US economy. Initial expectations call for a minor dip in durable goods and virtually no change in the weekly claims data.
We're long on the website at an average of 1575 and looking to bring our stops up if we can move above 1600.
Gold Going to the Chart
Yesterday’s plunge came on mid week Wednesday and on options expiration an on our last day of the short term cycle turn window. The ideal low for the month of May was May 20th (plus or minus 72 hours) and yesterdays low should have been the final push down if the cycle is to provide higher price into the first week of June. Resistance for Thursday is the 1576-1580 area and support is the 1548-1557 area .
In summary, we’re favoring higher to resistance on Thursday and any pullback to 1547-1555 should provide support for the remainder of the week. We favor that the short term lows are in place but obviously the Euro situation remains the wild card.
6.00 AM GMT
Long Term=Up (major resistance 1767-1804 needs to be exceeded on a monthly close)
Medium Term=BEARISH (Major Resistance 1767 Monthly Close) Technically in bearish mode.Intermediate Term= Bearish ( a price close above 1633 will neutralize the downtrend.)
Short Term= Bullish (It takes a close below 1537 to neutralize the bounce)
Support and Resistance for Thursday
Initial Resistance for 1566-1577 and 2nd tier 1587-1597
Initial Support 1541-1551 and 2nd tier 1526-1533
Recap
Gold futures took a wild ride on mid Week Wednesday as price dropped 40 dollars per ounce down to 1533 (which was the 2nd tier support number) and then price reversed higher back to the 1561 area (the 2012 Jan 2nd low). We don’t know how much it had to do with Options expiration, but we wouldn’t be surprised if the control boyz had their hand in it. Volume was huge hitting the 240K area.
Strength in the dollar and weakness in the Euro helped pressure gold and other physical commodity markets early today, as concern toward the Euro zone situation generally remained in place in spite of today's EU summit meeting.
Some traders suggest that the EU needs to produce something significant in order to restore confidence, with other traders waiting to see proof of credible action before putting a positive spin on the European debt crisis. In the end, the significant run up in Treasury prices seems to be signaling some type of major financial problems ahead.
The highlight continues to be the situation in Europe as the Greek ‘thing’ is coming to a head. Meetings in Brussels today but investors are skeptical that the informal European Union meeting will yield steps to help solve the region's debt crisis. But the game has shifted.
Hollande’s (France) May 6 election victory has shifted the debate in Europe, with his call for a new emphasis on growth alongside debt-cutting now a rallying cry for other leaders frustrated by Germany’s unwavering focus on budget austerity.
He is also mindful of deep resentment in France at the start of the year when many people felt Sarkozy had surrendered too much to Germany and undermined French sovereignty by agreeing on a joint push to give Brussels more sway over national budgets.
The change in the air was tangible on Wednesday.
The consensus is something must be done but the complexities of forging another bailout are wearing thin but there is no choice. Greece is the demo as Spain and Italy and Portugal are directly behind Greek with major problems and what happens in Greece----won’t necessarily stay there.
In other newsChina is struggling to land softly despite TV pundits statements, the U.S. is taking steps towards energy independence despite government obstacles, the BRICS are weakening as a strong source of Gold buying, and the impotency that is European’s politicians will do nothing until something more major occurs. For now only Gold holds hope of strengthening if perception changes from commodity to competing currency.
June Gold options expiration went off the boards today and we discussed last night the open interest potential in the 1550 area target and today’s low wiped out that option strike value first on the calls by dropping to 1530 and then the puts by moving back above 1550. All in a day’s work for the control boyz.
What Next?
With the major low yesterday, we favor that mid week Wednesday has provided the low and that a bounce into early June is in play. We’re not out of the wood yet. Thursday will probably be a consolidation day in the 1547-1580 area.
The chart below shows the support and resistance area. The moving averages at 1562 are offering first resistance but the 1575 area is resistance. Gold will most likely test the white dotted trend line just under 1560. Watch the 1547-1555 area on the downside as closing price resistance on Thursday. In summary, gold’s key reversal must NOW HOLD above the TUESDAY low of a deep sell off can occur.
Bottom line
We still favor a short term bounce is underway but we won’t rule out anything with this crisis. Once QE is announced, it should propel gold higher, but until then any hint of a default and we go right to action like we’ve witnessed.
1.00 AM GMT
No Deal Expected from the EU Meeting
The market was in a "risk off" mode as investors worried that the informal EU summit (which is still ongoing) would not finalize measures to resolve the Greek issue. Wall Street initially declined sharply but then reversed in the late session amid encouraging US data. The DJIA ended the day losing -0.05% while the S&P 500 added +0.17%. In the commodity sector, the front-month contract for WTI crude oil plummeted to 89.28, the lowest level since November 2011, before settling at 89.90, down -2.13%. while the equivalent Brent contract fell to a 5- month low of 105.39 before ending the day at 105.56, down -2.63%. Apart from the Greek turmoil, reports that the IAEA and Iran negotiation has made some progresses and the World Bank downgrade of China’s growth forecasts also weighed on prices. Gold plummeted for a third consecutive day to 1532.8 before closing at 1548.4, down -1.79%.
Optimism over the informal EU summit appeared have faded as news said that world leaders failed to compromised on important issues. For instance, while both French President Hollande and Italian PM Monti have pushed for euro bonds, others, mainly Germany’s Chancellor Merkel, opposed to the idea. Talks of Greek exit remained hot. St Louis Fed President Bullard opined that the debt-ridden Eurozone country could exit the bloc without causing too much damage to Europe and the US if the exit was handled in "an appropriate way".
Elsewhere, the growth outlook in China, the world’s second largest economy, continues to show some worrying signs. The World Bank reduced its forecast for China’s economic growth to +8.2% this year from previous projection of +8.4%. The lender suggested that "fiscal measures to support consumption, such as targeted tax cuts, social welfare spending and other social expenditures, should be viewed as the first priority". The country’s PMI compiled by HSBC and Markit showed that, with a preliminary reading pointing to 48.7 in May from 49.3 in April, China’s manufacturing activities may contract for a 7th straight month.
May 23
4.00 PM GMT
The breakdown in gold over the last two days has gold reaching the last level of support 1547-1555 before 1530 again. The move to 1599 is looking more and more like it was a major bear trap. The dotted white trend line needs to hold on an hourly closing basis. Theres a minor support level at 1539 not seen on the charts but the situation is not very bullish at the moment. The short term cycle window closes today and that is about the only hope we have that today will be a low point for the week. The EU is meeting again in Brussels to review the situation with Greece but this liquidity squeeze if wrecking havoc on all markets once again. Support for the remainder of the day is the 1525-1533 area and resistance is now strong in the 1566-1575 area. If we break the lows of last week, the potential for gold to move much lower will be in play.
1.00 PM GMT
Gold dropped on Wednesday early trading as investors remained worried that today's informal EU summit would not come out with solutions to ease debt crisis amid possible frictions among European leaders.
The main spotlight today will be on the EU summit that will tackle euro area fiscal problems, where probably the meeting would show disagreement between Germany and France over introducing Eurobonds.
German Chancellor Angela Merkel said on Monday she will not be shy to reject Hollande`s idea of introducing Eurobonds to continue its rejection to the common bonds idea which is also favored by Italy, Belgium, Luxembourg and peripheral countries.
Thus, with the debt crisis intensifying gold is predicted to face more downside pressure after losing its safe-have characteristic for the dollar.
Yesterday, the OECD lowered its growth forecasts to 0.1% contraction this year from November's forecasts of 0.2% growth and 0.9% expansion in 2013 from prior forecast of 1.4% expansion.
Additionally, OECD said debt crisis is intensifying and "may materialize and spill over outside the euro area with very serious consequences for the global economy."
In the FX market, the dollar touched 20-month high against a basket of major currencies, where the dollar index hit a high of 81.83 after opening today's trades at 81.63, putting more pressure on commodities.
On the physical side, the drop in the Indian rupee against the dollar made gold more expensive in the world's largest gold buyer which is losing its rank for China.
Spot gold is traded around $1560.65 an ounce after falling from a high of $1568.63 while the day's low was recorded at $1555.28.
6.00 AM GMT
Long Term=Up (major resistance 1767-1804 needs to be exceeded on a monthly close)
Medium Term=BEARISH (Major Resistance 1767 Monthly Close) Technically in bearish mode.Intermediate Term= Bearish ( a price close above 1633 will neutralize the downtrend.)
Short Term= Bullish (It takes a close below 1537 to neutralize the bounce)
Support and Resistance for Wednesday
Initial Resistance for 1575-1587 and 2nd tier 1599-1605
Initial Support 1547-1555 and 2nd tier 1526-1533
OPTIONS EXPIRATION FOR JUNE GOLD ON 5/24
EURO LEADERS MEETING THIS WEEK IN BRUSSELS
Fitch cuts bank of JAPAN ratings
Recap
Gold futures slipped lower on Tuesday, moving in sympathy with a weaker Euro (and stronger dollar). Markets had a wide variety of headlines to digest, including a credit downgrade for and (expected) stimulus from the Bank of Japan, as well as an informal meeting of European leaders. Greece (and the possibility of its exit from the EU) is sure to figure prominently in those discussions. Today’s trading activity, which saw futures trading as low as 1561 in the afternoon session, negates much of the strong upward momentum we had going into today (a $65 rally from major support on robust volumes). Today’s sell-off was on lighter volumes.
The markets continue to be under pressure in equities and commodities. The grains were absolutely crushed, oil was down, the DOW gave up a nearly 100 point gain, and gold and silver were caught in the downdraft.
NOTHING has been solved with the Liquidity crisis. In fact, it’s getting worse. The global situation continues to draw cash out of banks and the Greek situation could put in motion a string of events that are as far reaching as a Euro exit. Things remain very dangerous on all fronts.
June Gold options expiration after the close on Wednesday. Perhaps the open interest is targeting the 1550 area.
What Next?
The zoom in chart shows price and the strong move up which we got over the last three days but the drop has not yet neutralized the short term update. With Mid week Wednesday here, we should see a price low for the week. Watch the 1547-1555 area. IF this uptrend is for real we should not get below this area. We were looking for a price high going into Wednesday and Thursday, but with the big drop on Tuesday, we might end up with a low for the week. In any event, price pressure has returned and the pullback pattern was impulsive. My mid east source told me that gold is once again flowing as the banks delivered previously ordered physical and the premium on the metal price dropped in half. Wednesday as it turns out will most likely provide the low. The short term cycles should have bottomed but if the EUROPE talks start hitting the financial networks then we have to be careful. THE EU is having an informal meeting today. HMMM ?
the 1547-1555 is a key area on the chart and where we need to look for support on Wednesday.
4.00 AM GMT
SPOT GOLD closed lower due to profit taking on Tuesday. The lowrange close sets the stage for a steady to lower opening when Wednesday's night session begins trading. Stochastics and the RSI are bullish signalling a low might be in or is near. Closes above the 20day moving average crossing are needed to confirm that a shortterm low has been posted. If it renews the decline off February's high, the 38% retracement level of the 20082011rally crossing is the next downside target.
May 22
8.00 AM GMT
Trading settled between 50% and 38.2% correction of CD leg of the Deep Harmonic Crab pattern; where those levels are at 1599.00 from above and 1582.00 from below. Stability above 1582.00 keeps the upside potential strongly valid and we might see a retest of those areas and maybe the extension of the downside wave towards 1571.00 before attempting to the upside once again. Breaching 1561.00 will weaken the upside harmonic structure.
The trading range for this week is among the key support at 1540.00 and key resistance now at 1616.00.
The short term trend is to the upside targeting 1945.00 per ounce as far as areas of 1475.00 remain intact with a weekly closing.
Support: 1582.00, 1579.00, 1571.00, 1561.00, 1552.00Resistance: 1590.00, 1594.00, 1599.00, 1608.00, 1616.00
Recommendation Based on the charts and explanations above, our opinion is buying gold around 1582.00 targeting 1599.00, 1608.00 and 1616.00 and stop loss with four-hour closing below 1550.00 might be appropriate
4.00 AM GMT
Long Term=Up (major resistance 1767-1804 needs to be exceeded on a monthly close)
Medium Term=BEARISH (Major Resistance 1767 Monthly Close) Technically in bearish mode.Intermediate Term= Bearish ( a price close above 1633 will neutralize the downtrend.)
Short Term= Bullish (It takes a close below 1537 to neutralize the bounce)
Support and Resistance for Tuesday
Initial Resistance for 1598-1609 and 2nd tier 1621-1631
Initial Support 1572-1582 and 2nd tier 1557-1564
Recap
June Gold settled slightly lower on the day, stalling out after a failed effort to trade above 1599. Technically, this does little to dampen our bullish sentiment; compared to gold’s $65 rally from major support (1526.70- the December low) in the three previous trading sentiments, today’s $3.20 sell-off appears inconsequential. Our next major target to the upside is 1603-1609 and 1625-1631. The 50-day moving average is at 1641 and with the last slide starting from near there, it is possible that gold is gearing up for a move in that direction. Good volumes and open interest also favor higher prices.
June Gold options expiration is on June 24th, and could be a major factor in price action. Also, the rollover out of June Gold into August takes place next week. Usually, we get a small pullback during that activity, but that is for next week. The uptrend continues.
JP Morgan
The chart below shows the massive derivative holding at JPM
Gold and Iran
ISTANBUL, Turkey -- Turkish gold sales to Iran in March soared over 30 times and gold companies said Iranians were turning to gold for savings and possibly trade as Western sanctions tighten. Sanctions to force Iran to curb its nuclear programme have targeted its energy and banking sectors and new measures from both the United States and European Union take effect in July, aimed at strangling Tehran's foreign earnings. The sanctions have made neighboring Turkey an ever more important channel for the Islamic republic. Data from Turkey's Statistics Institute on Thursday showed gold exports to Iran rose to nine tons, worth $480 million, in March, from 286 kg a year earlier and compared to just 30 kg in February this year. They were the highest monthly exports to Iran since records started in 2010. Total gold exports were 11.1 tons in March.
What Next?
The zoom in chart shows price and the strong move up which we got over the last three days. Since it’s impulsive and not choppy and overlapping, it favors higher prices for the coming week. First resistance will be 1603-1611 and then 1623-1631. There are two key pullback area’s to watch for---- 1568-1575 and 1555-1562. One of those two areas should provide first support to any pullbacks. We favored a move to 1603 on Monday and got to 1599. Tuesday favors higher above 1600. As it stands, Wednesday, or early Thursday morning is the ideal time for a price high this week.
MONDAY had the potential for a long range day but all we got was a consolidation day. Tuesday favors higher again. If we do get a pullback, 1575-1585 would be the target.
Bottom line
The short term trend has turned up and any pullbacks in the 1560-1575 area is a consideration for a long position on a trade. Long term investors should continue to accumulate in this area. We’ve had very bullish news on physical supplies, and we’ve been waiting for price to confirm the news. The last 48 hours has done so. We’ve added some new important moving averages we’ve been working with to better isolate some short term trades. Whenever the mini blue line is up trending and above the mini purple line, the trend is up on a daily basis. Whenever the blue moving average is above the RED moving average, short term pullbacks to those averages favor dip buys.
ONE THING to be on guard for. Price is right at the fast blue and red moving averages, and it is possible that we will get a break down to the purple average at 1574. If we do, odds favor it’s a buy in the 1565-1575 area.
May 21
4.00 PM GMT
While June gold managed a minor new high for the move overnight, the market wasn't able to hold that initial probe as we reached 1599, a typical local profit taking area. Now we’ll have to watch closely today as today is a day where unusual events are at a HIGH degree. The markets are at a key point on many of the charts. For the Dow, the 12220-12300 area is one that needs to be watched for a potential short term low and bounce. There are key medium term cycles due to bottom but the week of June 15th also has the potential to ring in a low.
CME NEWS
Gold was probably lifted by hints of support for the Chinese economy from the Chinese leader overnight and it is also likely that gold saw some lift from the Fed's Lockhart who suggested that sustained monetary accommodation was still warranted. Lockhart also suggested that the dominating risk to the US economy was from spillover from Europe. (yea, still blaming them for US woes)
With the World Gold Council last week seemingly fashioning quarterly supply and demand figures into a suspect bullish condition, the direction of the Chinese economy could become a key determinant for gold prices in the near term. In fact, evidence of slowing in the Indian economy and slumping Indian gold demand is thought to more than offset the anticipated rise in Chinese demand ahead especially if the Chinese economy shows any further slowing.
All things considered, the bulls seem to have taken control of the short term but might be somewhat reluctant by the lack of upside action above 1600 in gold prices this morning in the face of supportive dialogue from the Chinese leader and from a member of the US Fed. In fact, seeing gold prices waffle around both sides of unchanged this morning, in the face of supportive currency and US equity market action, would also seem to suggest that a portion of the gold trade is watching for direction and a bit edgy after a 70 dollar reflex bounce over the last two trading days.
The big news is The Commitments of Traders Futures and Options report as of May 15th---- for Gold showed Non-Commercial traders were net long 103,824 contracts, a decrease of 17,155 contracts. The Commercial traders were net short 130,952 contracts, a decrease of 20,244 contracts. The Non-reportable traders were net long 27,128 contracts, a decrease of 3,089 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 130,952 contracts. This represents a decrease of 20,244 contracts in the net long position held by these traders. While the non commercial and non reportable net long position in gold was pegged at 130,952 contracts in the last COT report, June gold did see an additional $31 an ounce slide to last week's lows, from where the COT readings were measured and therefore the net long readings might have seen even more liquidation before gold prices recovered late last week. THE BOTTOM LINE IS THAT THE COMMERCIAL POSITION IS IN A VERY BULLISH position when measured against past performance. IT is rare they are net long and these low levels are in the range of 2009 readings. This plays with our reports we are receiving from a confidential mid east source who deals in the SPOT gold market and reports of SHORTAGES and a difficult time to procure spot gold at the moment.
Hong Kong shares were weaker overnight but mainland Chinese shares managed to claw out minor gains off hints of easing from the Chinese government. European equity markets were a touch higher in the wake of comments from the G8 that suggested there would be an ongoing effort to keep Greece in the Euro zone. Surprisingly US equities were moderately higher in the early action today, perhaps because of the supportive Chinese dialogue and perhaps because of suggestions from the Fed's Lockhart that sustained monetary accommodation was still warranted and that the Option of QE3 couldn't be taken off the table. From a chart perspective, the stock market is oversold as last week was the biggest one week drop year to date. The 12220 area in the Dow is an Armstrong weekly reversal number so it might be wise to pay attention should we trade down to that area this week.
The US economic report slate today is somewhat thin with a Chicago Fed National Activity index release that is expected to rise by a minimal amount.
Gold Going to the Charts
The most important factor last week was the break of the 2008 channel line in gold. This line has been in effect since the 2008 lows and is the MOMENTUM SLOPE FOR MEDIUM TERM PRICES. In other words, this line represents the current momentum of price and is an important price line on the charts. Notice how last week we broke below this line and carried some 60 dollars below it and to within 7 dollars from the Dec 29th low of 1521 gold. The drop below the channel line is more than what I’m used to seeing. But as we have stated many times, it’s not the break of the channel that counts, it’s what price does after the break. The Thursday and Friday reversals carried gold back into the channel for its Friday close to keep the uptrend and support area alive. The chart action is a bullish hammer reversal and is one of the highest degree of patterns on charts for price low reversals. Keep in mind there are no absolutes in trading and most anything else for that matter. The green highlight area shows just how important last week’s low was. I’m surprised they did not take out the 1521 low as there are a LOT OF STOPS below that area.
Thus from this longer term perspective, the potential that we made short term low is not in question, but whether it has made a longer term low. The COT position is very bullish, and the spot market is very tight. That favors higher prices but the question now becomes the CONTROL BOYZ as June options expire Wednesday. With gold reaching 1600 this morning, it might be the spot where most puts and calls are placed and where the control boyz want prices to close on Wednesday. Support for the week is the 89 week moving average at 1555 (plus or minus 15 dollars). Thus the potential for a weekly low is good. Let’s keep in mind that we have one more seasonal pullback due going into July. The Mid May to Mid June period is most often a higher price point for the year. Thus we can favor a bounce into June, but we still need to see the price action as it develops. THE TECHNICALS (RSI, WILLIAMS) are all at a position where important lows are made on a weekly basis.
If we look at the short term chart, the market has turned up and has reached first key resistance for the week at 1600. We have first support coming in at 1574-1582 for today and then the 1550-1560 area as first weekly support,
The best read is that we have a short term bottom from last Thursday and favors a bounce into the first week of June. The best place for buys looks to be the 1550-1560 area, but we don’t favor moving there today. The other area to watch is the 1572-1582 area which is today’s support. Resistance is the 1596-1603 area today so that’s the spot to watch. There is additional resistance at 1611-1613.
In summary, the short term trend has turned up, let’s see if we can get a pullback towards 1570-1580 or 1560 this week. Today has potential for a wide range in price so be on guard. On the upside, potential to 1620-1633 is in play on a weekly basis.
3.00 AM GMT
Look for a move to 1599-1603 and up to 1609
Long Term=Up (major resistance 1767-1804 needs to be exceeded on a monthly close)
Medium Term=BEARISH (Major Resistance 1767 Monthly Close) Technically in bearish mode.
Intermediate Term= Bearish ( a price close above 1623 will neutralize the downtrend.)
Short Term= Bullish (It takes a close below 1537 to neutralize the bounce)
Support and Resistance for Monday
Initial Resistance for 1599-1609 and 2nd tier 1621-1631
Initial Support 1572-1582 and 2nd tier 1557-1564
OPTIONS EXPIRATION FOR JUNE GOLD ON 5/24
Medium Term=BEARISH (Major Resistance 1767 Monthly Close) Technically in bearish mode.
Intermediate Term= Bearish ( a price close above 1623 will neutralize the downtrend.)
Short Term= Bullish (It takes a close below 1537 to neutralize the bounce)
Support and Resistance for Monday
Initial Resistance for 1599-1609 and 2nd tier 1621-1631
Initial Support 1572-1582 and 2nd tier 1557-1564
OPTIONS EXPIRATION FOR JUNE GOLD ON 5/24
Recap
Current Bullish Features
MONDAY has the potential to be a LONG RANGE DAY in the markets. If it’s to the upside, gold could move towards 1620 quickly this week. I’m hoping it’s a pullback to try a long position. We’ll favor higher on Monday at least to the 1603 area. With the G8 having met over the weekend, I’m almost positive they’ve cooked up some type of support for these markets. Whether the markets will allow such a move remains to be seen, but overall we favor price lows have been made at a minimum on the short term.
The key levels of support for Monday is the 1572-1582 and the 1559-1562 area. Look for a move to 1599-1603 and up to 1609. BE CAREFUL on MONDAY --- long range days can cover both ends. It is a day where the ODDS are much higher than normal for big market activity.
Friday saw heavy selling pressure coming into risk assets, specifically equities and oil. However, the real driving force behind the selling pressure is likely the result of several unrelated economic/geopolitical events. Clearly the unemployment report had an impact on price action, but strangely enough it would appear to those more in tune with reality that market participants want lower prices so that the next quantitative easing program can be initiated. Gold once again bucked the trend and moved higher and above 1590 and finished the week inside the long term green channel line---a bullish chart development.
Current Bullish Features
Gold price has returned to backwardation and physical shortages reported by confidential sources that are in a position to know the “real” situation. Reports of partial deliveries in physical market and higher premiums to spot as well as no scrap gold coming through the system argues for an important low having been established.
Short term cycles point higher into the first week of June.
A major price hammer reversal on the weekly chart from last week has a high degree potential of a key price low and having it come at a major long term channel gives it a lot more weight.
The wild card for this week is the liquidity panic. If there is no major ‘event’ gold is favored higher. If there is an event, and the G8 come in with intervention or announced bailouts or more printing, gold should move higher.
Watch the stock market, if it reverses higher here (and we did hit important support on the 34 week moving average) then the potential will increase for more upside in gold. The G8 met over the weekend and it will surprise me if we don’t have a big up day in stock markets.
Short term cycles point higher into the first week of June.
A major price hammer reversal on the weekly chart from last week has a high degree potential of a key price low and having it come at a major long term channel gives it a lot more weight.
The wild card for this week is the liquidity panic. If there is no major ‘event’ gold is favored higher. If there is an event, and the G8 come in with intervention or announced bailouts or more printing, gold should move higher.
Watch the stock market, if it reverses higher here (and we did hit important support on the 34 week moving average) then the potential will increase for more upside in gold. The G8 met over the weekend and it will surprise me if we don’t have a big up day in stock markets.
What Next?
The zoom in chart shows price and the strong move up which we got over the last two days. Since it’s impulsive and not choppy and overlapping, it favors higher prices for the coming week. First resistance will be 1603-1611 and then 1623-1631. There are two key pullback area’s to watch for---- 1568-1575 and 1555-1562. One of those two areas should provide first support to any pullbacks. We favor a move to the 1600-1603 on Monday.MONDAY has the potential to be a LONG RANGE DAY in the markets. If it’s to the upside, gold could move towards 1620 quickly this week. I’m hoping it’s a pullback to try a long position. We’ll favor higher on Monday at least to the 1603 area. With the G8 having met over the weekend, I’m almost positive they’ve cooked up some type of support for these markets. Whether the markets will allow such a move remains to be seen, but overall we favor price lows have been made at a minimum on the short term.
Bottom line
The short term trend has turned up and any pullbacks in the 1560-1575 area is a consideration for a long position on a trade. Long term investors should continue to accumulate in this area. We’ve had very bullish news on physical supplies, and we’ve been waiting for price to confirm the news. The last 48 hours has done so. We’ve added some new important moving averages we’ve been working with to better isolate some short term trades. Whenever the mini blue line is up trending and above the mini purple line, the trend is up on a daily basis. Whenever the blue moving average is above the RED moving average, short term pullbacks to those averages favor dip buys.The key levels of support for Monday is the 1572-1582 and the 1559-1562 area. Look for a move to 1599-1603 and up to 1609. BE CAREFUL on MONDAY --- long range days can cover both ends. It is a day where the ODDS are much higher than normal for big market activity.
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Do your own due diligence.
No one knows tomorrow's price or circumstance.
I intend to portray my thoughts and ideas on the subject which may s be used as a tool for the reader.
I do not accept responsibility for being incorrect in my speculations on market trend.
King Regards.
