GOLD TREND May 28 - June 01, 2012

June 1 
Gold high for the week 1630...Low 1530...Close 1624...

 9.00 PM GMT
 Prices to Buy Gold Spike Following US Jobs News, 
But "Trend Remains Bearish" with 
"Strong Dollar a Big Problem"

Dollar prices to Buy Gold jumped to $1589 per ounce on Friday, immediately after the release of worse-than-expected US nonfarm jobs data.

The US economy added 69,000 nonagricultural private sector jobs in May, according to official data published Friday, compared with analysts' forecasts for 150,000.

The US unemployment rate meantime ticked higher to 8.2% - up from 8.1% in April.

Gold's jump wiped out its losses for the week. By Friday afternoon in London, prices to Buy Gold looked set for a 0.6% gain on where they started the week.

Silver also spiked higher following the US jobs news, climbing to $28.14 per ounce - though this was still 1.4% down on the week.

"The larger trend [however] remains bearish," says technical analyst Russell Browne at bullion bank Scotia Mocatta.

A day earlier, gold's final London Fix of May 2012 was down 5.6% on April's last Fix - the third monthly fall in a row by Gold Fix prices. Spot Gold meantime - which back on February 29 fell by $100 an ounce after the PM Fix - ended May by making fourth straight monthly loss in Dollar terms.

By London Fix prices, gold has not fallen four months in a row since summer 1999.

In contrast with gold, European stock markets fell following the nonfarms release, extending their losses from Friday morning's trading.

Earlier in the day, German 10-year Bund yields fell to a fresh all-time low below 1.15%, while on the currency markets the Euro sank to its lowest level against the Dollar since June 2010.

Spain's banking system meantime saw €97 billion of capital leave the country in the first three months of 2012, according to figures published Thursday evening by the Spanish central bank. The Spanish government, which this week saw its implied 10-Year borrowing costs breach 6.7% for the first time since November, is trying to raise €19 billion to rescue nationalized lender Bankia.

The International Monetary Fund yesterday denied rumors that Spain's government has approached it for a bailout.

Over in Ireland, votes were being counted Friday following yesterday's referendum on whether or not to ratify the European Union's new fiscal treaty, which would impose limits of government borrowing.

"We are very, very confident [of a 'Yes' vote]," said Lucinda Creighton, Ireland's European affairs minister.

Press reports suggest around half of those eligible to vote in the referendum actually did so.

In Greece meantime, the biggest pro-bailout party New Democracy leads second place Syriza in the opinion polls, with just over a fortnight to go until the June 17 elections, news agency Bloomberg reports.

Syriza's leader Alexis Tsipras said Friday that the bailout agreement is a failure, reiterating that Syriza would reverse some of the Greek government reforms if elected, including privatizations and cuts to public sector wages.

"The [bailout] memorandum equals a return to the Drachma," Tsipras added.

The Eurozone's purchasing manager's index for manufacturing, a survey indicator of whether the sector is expanding or contracting, fell from 45.9 in April to 45.1 last month, figures published Friday show. A PMI above 50 indicates sector expansion.

Germany's PMI meantime fell to 45.2 in May - down from 46.2 a month earlier.

The Eurozone's unemployment rate meantime remained at 11.0%.

On the currency markets, the Euro fell to a two-year low against the Dollar Friday morning, remaining below $1.24.

European Central Bank president Mario Draghi warned Thursday that the current Eurozone structure is "unsustainable".

"At the moment, Europe and downside risks to the Euro are the problem for gold," says Michael Lewis, head of commodities research at Deutsche Bank.

"Dollar strength is going to be the big problem over the next few weeks."

The US Dollar Index, which measures the currency's strength against a basket of other currencies, hit its highest level since August 2010 this morning.

Here in the UK, manufacturing activity fell into contraction last month. May's manufacturing PMI was 45.9, compared to 50.2 in April. The consensus forecast among analysts ahead of Friday's PMI publication was for a figure just below 50.

The disappointing UK PMI figure "has increased dramatically the likelihood of the [Bank of England] announcing more quantitative easing next Thursday," reckons Deutsche Bank's chief UK economist George Buckley.

Manufacturing activity also slowed in China, the world's largest source of demand to Buy Gold in the first three months of 2012.

May's official PMI figure was 50.4, down from 53.3 in April. HSBC's PMI meantime, which looks at smaller Chinese firms, showed ongoing manufacturing contraction, falling to 48.4 from 48.7.

In India meantime, traditionally the world's biggest gold buying nation, gold demand for 2012 will fall by 4% by volume compared to last year - but will be 4% up in value terms - according to a report published by researchers at Morgan Stanley.

4.00 PM GMT

 Resistance is 1617-1623.  

For support the 1585-1603 area should be 

first support next week.

The jobs report was terrible and the stock market tanked and gold exploded higher.  The scenario that the markets are looking at is that the FEDS and ECB will have to announce something over the weekend in order to stop the bleeding.
Last night we put two charts together on the short term cycles that are due to turn on June 4th (plus or minus 72 hours).
Short Term – Short Term Cycles
the next trend change is due June 4th (plus or minus 72 hours).  We have a peak scheduled but this current price action is opening up the potential for an inversion.  (It’s only a 25% chance) at the moment.   In these crazy times, that would be the perfect scenario --- just what we don’t expect. We’ve only had one this year.  What would that look like?  
What if the pattern is really showing the scenario below and cycles are about to invert?   In other words, what if the red cycle was the high point and the BLUE cycle is going to make a low this time around?
The price pattern actually has a “FIT” where we could be looking at a May Low with a hard rally back up.  The last time this OCCURRED was the cycle of Jan 2012.  Look at the huge rally that occurred then.   We don’t want to get too excited by this because the trend has been down and it is still favored.  But I THINK WE NEED TO PAY ATTENTION just the same.  IF we START HOLDING BELOW THE LOWER CHANNEL LINE, the potential will increase as its been such a crazy time, that we do need to keep an eye on a potential development of this scenario.
We’re not sure if price is making a key high point that will peak next week or whether we made a major low and price is about to move much higher.  If there is a major announcement over the weekend,  price can certainly move higher next week.  Price reached the top of the channel today and resistance is 1617-1623.  For support the 1585-1603 area should be first support next week.  We’ll have to see how it plays out over the weekend, and if there are any announcements.

6.00 AM GMT
 It looks more likely that it would rise to 1571.73 - 1582.81 from 1551.00.
After which a downside move is expected.
Supports / Resistances
Res 2    1,582.8100
Ex-High    1,573.1700
Res 1    1,571.7300
Pivot    1,562.0800
Sup 1    1,551.0000
Ex-Low    1,552.4400
Sup 2    1,541.3500

2.00 AM GMT
"Gold and to a lesser extent silver decoupled from the rest of the 
[commodities] group on Wednesday and started to head higher," says a US analyst.
"Finally gold is behaving 'normally' and is 'profiting' from the fears surrounding the Euro," 
"Gold is proving to be good 'risk insurance' [but] we believe there may still be downside risks if the US Dollar continues to remain strong."
Standard Chartered also "see downside risks for the short term but remain long-term bulls," 
they said in a note.
 

GOLD swung in a relatively narrow range of $1552/$1572 yesterday before opening this morning flat at $1561, posting a 6% loss in May. As we expected fluctuations within the triangle development continued with offers around the upside of $1572 checking further gains. However the bullion was held up by technical bids and weak short exits not far above the critical support zone of $1520-$1530 as most markets fell on a weaker ADP private sector employment in US, increased US news claim of unemployment benefits and ongoing concern about Spain's capacity to raise capital without help. We are smelling a come back of some safe haven demand for the precious metal as it outperformed crude and equity markets overnight. But we remain firmly bearish in the medium term as the possibility of a credit squeeze is looming and room for monetary policy adjustments are limited.

 

Compass Direction

• Short-Term: NEUTRAL
• Medium-Term: BEARISH

May 31
4.00 PM GMT
 The 1571 spot or 1574 area is the RESISTANCE 
TO WATCH today
 
 CME NEWS 

After mounting a rather impressive recovery effort yesterday, from another probe of 1530 for the move, August gold has managed to start out the Thursday US trading session a bit higher and right on yesterday's high. A slight improvement in macro economic sentiment is seen from European and US equity market action and perhaps because of somewhat supportive dollar market action. Some traders yesterday suggested that the gold recovery was the result of a renewed move to quality status for gold, off renewed fears of a Euro zone breakup. However, other traders continue to focus on the prospect of a 4th straight monthly loss in gold prices and an ongoing risk-off environment and that could leave gold prices vulnerable to negative news from the Euro zone and or from any sign of soft data from the US.

Not surprisingly, the Spanish stock market posted the biggest monthly loss of the noted equity measures and that action leaves a threat hanging over the entire Euro zone. With Brent crude oil posting the biggest monthly decline in 24 months, commodity markets are certainly seeing a very difficult environment. Apparently some traders thought that gold's recovery bounce off the low yesterday was the result of renewed easing hopes in the wake of soft US data and therefore the gold markets reaction to the US data flow this morning will be a very important junction for the trade.

On the other hand, today's US data won't have its usual impact due to the ultra critical monthly US payroll readings due out on Friday morning.

 Chinese stocks were down again and that also resulted in a monthly loss in most equity market measures. European equity markets and the FTSE mounted also recovery effort but many investors were not expecting anything more than a temporary technical reprieve from the European debt saga. The US markets were showing minor gains but that action didn't seem to be the result of a definitive bullish headline development or potential. The US economic report slate today has a private jobs report due out early from ADP, initial and ongoing claims, a Chicago PMI report from the ISM and a Fed speech early in the session.

Gold Going to the Chart  

Gold is tested Friday resistance where the FAT YELLOW SHORT TERM DOWNTREND LINE RESIDES at 1574 (BASIS AUG GOLD) and 1571 Spot gold.  The other area to watch is the 1569 AUG GOLD area (1566 SPOT) where the green moving average resides.  Those area’s should be IMPORTANT resistance today.  IT’S A MONTHLY CLOSE SO THE 1555-1561 area SPOT or 1558-1564 in AUG GOLD is an area to watch as well.  We need to close above 1555 in order to maintain the positive flow.  MONTH CLOSE MONTHS CAN BE wide ranging so keep that in mind.  In summary, the 1571 spot or 1574 area is the RESISTANCE TO WATCH today. While yesterday was impressive, we’re still in a short term downtrend so be careful.

8.00 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 1609 will neutralize the downtrend.)
Short Term= NEUTRAL  (It takes a close below 1537 flip back to bearish) 
Wednesday hit 1530 again – and reversed higher
Support and Resistance for Thursday
Initial Resistance for 1573-1583 and 2nd tier 1598-1603
Initial Support 1544-1555 and 2nd tier 1507-1533.

 What Next? 

Price is in a trade range that reverses at the moment whenever it wants. . And the market at the moment is trendless, but can explode at any moment.   We’re seeing bottom action on some charts, but we need to get PRICE SUPPORTING on some trend lines, which so far hasn’t happened.  There are a lot of reports on Thursday that the markets will be watching.  The ADP report, chain store sales, a GDP REPORT, and a consumer comfort index update COULD HAVE EQUITIES screaming if the reports area bad.  Recently, weakness for some reason sparks gold higher over the last two weeks.  It’s like the Wild West out there, and anything can once again unfold on Thursday.  Will this ever end?  Yes, the market will return to more normal trends once this correction is finally over.  Thursday is also the last trade day of the month so it can be a long price range day and a wild affair again.  WE NEED TO CLOSE ABOVE 1537-1555 at a minimum and more FAVORABLY would be closing above 1561-1571.  Let’s be ready for anything on Thursday.

Bottom line

Thursday could be another wild day as its month end. There’s a ton of bullish factors for gold and if gold can get above the downtrend line at 1576 then the bounce will continue towards 1600.  The three major lows at 1520-1530 in May has now become a major price point.  In summary, gold has once again held 1530 and the key now is can I follow thru?  These bounces have been good for at least a couple of days so the odds favor that Thursday should be an up day but we think it all comes down to whether gold is ready to move above the Downtrend line and the fat green moving average in the 1575 vicinity. With month end, all kinds of Economic reports, and a JUNE FUTURES contract that is in full roll over to August as it only has two days left before FND (First Notice day) gauging gold is a coin toss. We think today’s bounce from 1530 will find support at 1545-1555, but we again won’t rule anything out –and the chart below is why we can’t rule anything out.  It can be another Wild West day on Thursday.  It comes down to that downtrend line and whether gold is ready to move above it.

 
2.00 AM GMT

Our discussion last night of the water torture scenario of major reversal’s up and down played out again on Wednesday, and that has left me with no position in gold and silver.  Since there is no trend that can be trusted at the moment, the best thing to do is sit patiently until this plays out.  It is evident that the market has no intentions of showing its hand or to give opportunity to get in near a price low.  The reason I’ve avoided longing the 1530 area is that it’s so close to the most important area on the chart that there is no telling whether it will provide a break lower on one of these tests.  Wednesday found gold down 25 dollars and another reversal of almost 40 dollars occurred during the day.  We’d like to say the low is in for this week as today’s mid week Wednesday again provided the weekly low but at the moment nothing is trust able.  The conditions on the chart are just not trade able with any degree of confidence and it has been that way since May 10th.   Thursday is the last trade day of the month, and it could give us a long range price day.  At some point, we’re going to come out of this but for now, it’s best to say we’re in a major chop and sideways pattern that can move in either direction and at any time.

 Today’s high reached the yellow downtrend line and until we close above that line we can say that the downtrend is still intact.  However, it’s really turned into a choppy sideways pattern that best can be described not trade able. I’d like to say that Thursday favors higher, but there is no confidence at the moment for accurate daily outlooks.  A move above 1572 in June gold (1575) in August would favor the upside, but even that is tenuous.

The short term chart above is a night mare and we described it as looking ready to move down hard last night with the caveat that it could just as well reverse on Monday and that’s just what it did.  Thursday is the last trading day of the month and the moves can be just as wild. We need to close above the 1555-1571 area to maintain monthly closes above the opening yearly price range of 1561-1571 from January 2nd.  

 

May 30

 5.00 PM GMT
 Resistance for the remainder of the day is the 
1570 area-1573 area 
and support is the 1547-1555 area.

August gold dropped to the 1530 area again overnight and with a mostly negative outside market environment. The bears in gold has to feel like they have the edge today. With recent Chinese stimulus hopes tamped down by Chinese media sources overnight and noted gains in key European debt yields and sharply rising CDS rates, the trade is facing a risk-off view in the Wednesday US trade.

Some traders are watching the On-Line Help wanted index release this morning, suggesting that the proximity to the monthly Non Farm payroll report on Friday could make the report today more critical. In the near term, the focus of most commodity markets is expected to remain centered on the severity of the Spanish banking situation, especially with bank recapitalization rumors rampant in the trade overnight. Therefore the gold market is seemingly losing favor off a number of potential global slowing threats and some traders think it will take very strong evidence of growth in the US to even begin to countervail the threat of slowing from China and Europe. Dollar market pressure also favors lower in gold today as the Euro has remained under pressure and the Greenback has once again returned to its flight to quality standing.

Chinese stocks resumed a downward pattern overnight as recent Chinese stimulus hopes were reduced once again by regional media sources. Not surprisingly, European equity markets also resumed a downward march as Euro zone concerns were present again in the facing of rising Italian and Spanish debt yields. Some of the European equity market weakness overnight might also have been the result of the dampened Chinese stimulus talk. The US markets are showing moderate losses in the wake of the latest up tick in Italian and Spanish debt yields, as the pace of the US economy isn't thought to be strong enough right now to stand up to ongoing Euro zone and Chinese slowing threats.

Gold Going to the Chart

Gold once again has touched the 1530 area and has produced a big bounce back up to the 1560 area where 1661-1671 will be the most important resistance for today.  If we were to close above 1571 it would once again give the bulls the upside advantage.  Gold is the one commodity that has been able to come back here and erase all its losses and actually moved in positive territory.  Whether that is just a huge short cover rally or whether the market is fed up with everything and a safety move to gold has taken place remains to be seen.  With the end of the month here and the close tomorrow, gold is doing what it has been doing for a few weeks now and that is fighting the 2012 opening price range 1561-1571. Each time we move below this price range we get a sell off that reverses and then moves back above it only to get another sell off below it.  This has been going on since May 10th as every direction this market takes whether on the up or downside, gets reversed.

TODAY’s reversal from 1530 back to1560 looks like a significant development if price can hold higher.  This is a very impressive move despite a stronger dollar, weaker Euro and a 150 point stock market drop and with oil 3 dollars lower..  

Resistance for the remainder of the day is the 1570 area-1573 area 

and support is the 1547-1555 area.

In summary, today’s reversal is a significant development in gold as it’s the only commodity that has given a major reversal higher in light of every other market moving lower. However, this action is the same thing we keep seeing inside this 1530-1590 area in gold that we have been stuck in. We’ll have to see what it leads to, but many will be impressed with the outcome for gold today.

In summary, the global situation has major concerns over the liquidity crisis and the metals dropped hard with all other assets but has done what other assets have not so far today --- and that is to reverse higher.  If this holds, it could be a significant change for the market.  Since we’re still in the range we’ve been in its going to take more than just today. 

 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= NEUTRAL  (It takes a close below 1537 flip back to bearish) BUT THIS MARKET LOOKS READY TO TANK AGAIN AT THE MOMENT.
Support and Resistance for Wednesday
Initial Resistance for 1556-1566 and 2nd tier 1678-1682
Initial Support 1539-1544 and 2nd tier 1507-1533.

 Recap

Gold was down hard on Tuesday closing below the yearly opening range of 1561-1571 as gold just all of a sudden let go again trading from 1580 to 1546 with the brunt of the downside all coming in a short amount of time.

Gold has now gone into a water torture trading where every rally is reversed and so is every sell off.  Since May 10th – we’ve made absolutely no headway --- we’re at the same price we were then and the range is a 60 dollar range with nothing but reversals every time we get on board.

And to some extent this is what the market does after such a long trend like we had in the last few years.  Its busy trying to pull all the gains away. The chart below shows the action.  A total mess.  Each time we move above the averages, it breaks down in a HARD DROP ------and then REVERSES HIGHER in a HARD MOVE UP and yet --- basically staying unchanged since May 10th.  The Tuesday action was very disappointing and it now looks like price has just once again fallen right out of bed for what reason today I have no clue as equities held their rally.

But the bottom line to all of this is that since this is the 3rd failure at the 200 hour fat green moving average line and since there has been no follow thru to any downside activity, indeed the opposite, violent rallies back up, trading this market is at the moment, a waste of margin.

Nothing follows thru.  This is exactly what the market does when it rids itself of the players that have moved to gold and silver (or any other commodity for that matter.)  IT breaks you down and frustrates you until you finally move on to a much easier market.  It gives you no good entry as 30-40 dollar moves come out of nowhere, and disappear the next day. And either side gives way.  AT THE MOMENT --- the bears have regained control, but it’s a trade range again and has been so since May 10th.   It can just as fast turn back around one more time before the cycle turn.

 What Next?

Price is in a trade range that reverses at the moment.  Tuesday is favored lower but price is at key support areas on the chart. And the market at the moment is trendless, reversing everything it gets a hold of.  Until we can see more bottoming action, we’ll favor lower on Tuesday. 

  Bottom line

Gold is on a short term bounce but remains below the medium term trend line and short term cycles are due to peak this week.  With the recent pattern we’ve been seeing, we are flipping violently up and down with no trend that stays – on either the up or the down.  Watch 1545-1551 on WEDNESDAY basis the August contract.  Moves below 1540 would have this market under pressure again.  With short term cycles due to peak, we’ll keep our eyes open .Price always rules.  WATCH THE 1539-1544 area, that's gotta hold.

May 29
 4.00 PM GMT

Gold moved back to the 1580 level this morning but the market hasn’t been able to breakout above those gains through the brunt of the European trade. Clearly the bulls were cheered by the relative strength in equities overnight and at least in the early action today as gold also had the benefit of supportive dollar market action.

Gold  probably needs to see something positive from today's sweep of US economic data, as that type of news recently has distracted the market away from the trouble in the Euro zone.

After some initial weakness Asian equity shares recovered off a growing anticipation of additional Chinese stimulus directly ahead. European equity markets were also slightly higher off Chinese stimulus talk and perhaps because of ideas that pro-bailout forces might be regaining some ground in Greece. The US markets were showing initial gains early this morning, as the US has become the preferred global equity market in the wake of relatively stronger US data from last week.  The consumer confidence numbers were weaker than expected this morning.

The recapitalization  of Spain’s 3rd largest bank, Bankia (18 BILLION EURO’s) is some big news this morning and the notion that China is going to loosen monetary policy has commodities and equities higher this morning. In Spain, the equity market is down 12% month to date, and the 10 year note is at 6.4% .  7% is considered the “uncle” zone.  Unemployment is at 24%.

The Euro is not moving today so far and continues to trade in a narrow band just above 125 and has not been able to tack on a good bounce so far.  Moody’s says leveraged loan defaults may increase 25%.

Bank of Spain says 24% unemployment will get worse.  USA, China, Hong Kong, were up strong thus far In equities.

Gold Going to the Chart

The purple channel lines represent resistance and support.  Today’s pullback to 1570 gave support as the FAT green short term moving average provided support so far this morning also as it has moved to the 1570 purple trend line.  The next purple trend line is  at the1595 area and that is the next key resistance point to watch for. There is also minor resistance today at the 1587 area where the dotted mini white line crosses.  One of those two areas should provide the highs for today.  Thus 1587-1588 or the 1595-1597 looks to be the upside resistance so far this week.

Price has also been hanging around just above and below the green downtrend line near 1580 and has fought for most of the day to get a move that can sustain above this line. Thus keep an eye on the 1564-1574 area as well where first support will come in play.  FIRST WEEKLY support is the 1547-1551 area.  In summary, as long as gold remains above 1564-1574 the short term uptrend is in play but its best to remain cautious because while the short term is bouncing, the intermediate and medium term trends still remain down and the short term cycles are due to peak later this week or early next week.

4.00 AM GMT
 We favor higher price on Tuesday. 
Watch the 1578-1585 area first and then 
the 1595-1603 area on Tuesday. 
 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 Tuesday
Initial Resistance for 1586-1596 and 2nd tier 1603-1613
Initial Support 1547-1559 and 2nd tier 1526-1533.

What Next?

Prices are favored higher on Tuesday and favor testing the 1585-1595 area. On the downside the 1560-1567 area seems to be the downside support most favored.  Speculation that China will do something to bolster stimulus has the markets in favorable mode here on Tuesday.

.A close below 1540-1547 would leave the market in a dangerous situation with downside potential.

It looks like gold wants to support in the 1567-1570 area on Tuesday. If not additional support would be in the 1551-1555 area.   

We favor higher price on Tuesday. 
Watch the 1578-1585 area first and then the 1595-1603 area on Tuesday. 
Bottom line

Gold is on a short term bounce but remains below the medium term trend line and short term cycles are due to peak this week.  Thus we’ll favor higher on Tuesday but we’re cautious that a short term peak could take place this week.  Be careful.

 May 28
2.00 AM GMT

 Elliott: irregular flat correction up 1584.08
It should trade higher to 1581.01 while 1562.24 or 1558.24 

offers support. Stop loss below 1543.48 zone.

Supports / Resistances
Res 2    1,589.0200
Ex-High    1,574.2600
Res 1    1,581.0100
Pivot    1,566.2500
Sup 1    1,558.2400
Ex-Low    1,551.4900
Sup 2    1,543.4800

 

Gold held below $1570 an ounce, tracked by a multi-month low Euro coupled with robust US dollar. Worries over the debt crisis in Europe twisting out of control and crash the global economy triggered selling in eurozone currency. Bullion elicited selling to cover the losses in other markets and on encouraging economic releases from the US.  The US economy is showing signs of economic revival with better employment and manufacturing figures.
As the weekends, commodities and equities were mostly up amid persisting euro zone debt woes. However, with the long weekend for the US, volume is expected to remain thin. The US markets will remain closed on Monday, 28 May on account of Memorial Day holiday.  Spot gold was seen rising following an initial decline during the morning trades supported by firmer euro which as began to decline as US investors moved out of the markets or into safe assets for the holiday.

Gold Analysis May 28 – June 1, 2012

Gold prices always rise when there is uncertainty in the global economy. In times of uncertainty, investors tend to run towards gold. Suppose, rumors are flying high about some event in the world and this is increasing the uncertainty in the financial markets.
    Gold reacts to uncertainty in the markets
    Gold reacts to the Federal Reserve and monetary policy
    A drop in major currencies can indicate a run into gold.
    Remember investors tend to take profit from gold so watch for trading opportunities when investors are taking profits, not moving out of the markets.
Gold  closed down slightly on the week at 1572.25, negating last week’s bullish hammer in the candlestick charts. This is gold’s 2nd week below the previous long-term uptrend and thus the outlook remains bearish.  Overnight strength in the dollar pushed gold lower,As shown below gold ranged from a high of 1598.95 to low of 1533.25.

Highest: 1598.95

Lowest: 1533.25

Difference: 65.70

Average: 1569.53

Change %: -1.38

Gold remained low as investors spent the week supporting the USD and JPY as safe havens. With the USD reaching new recent highs, the value of gold was less attractive.
With risk aversion the tone of the markets, most commodities suffered all week.
As the weekends, commodities and equities were mostly up amid persisting euro zone debt woes. However, with the long weekend for the US, volume is expected to remain thin. The US markets will remain closed on Monday, 28 May on account of Memorial Day holiday.  Spot gold was seen rising following an initial decline during the morning trades supported by firmer euro. Still, it was probably heading to end the week in loss after displaying a spectacular recovery in the previous week.  Euro retreated from its two year low levels against the US dollar, yet worries over worsening financial health in the Euro zone and weak economic indicators from China cast dark shadows over the global economy.
Sentiment in trade was sanguine after Italian Prime Minister Mario Monti hinted that most EU leaders support sales of joint bonds for the Euro region. However, reports that China’s leading banks may fall short of loan targets for first time in 7 years nudged the renewed mood. Looking into the evening session, there are no major data slated for release. It remains to be seen in the coming days how the situation transpires in Europe as exit of Greece seems almost looming at this point in time. The week has seen encouraging numbers from the U.S but the situation in Europe continue to weigh on investors. Next week could give a better indication of the U.S economic recuperation with the Nonfarm payrolls data scheduled for release. Also in line, next week is the U.S GDP figures, both heavyweight numbers could have a significant bearing on the commodity prices. The recent string of weak numbers from China is raising fresh concerns about the pliability of the Chinese economy amid softening global demand and in that regards, policy easing from China could be on cards in the coming days.   

Gold is entering the long US holiday weekend 

at 1566.25 up 8.75.

Gold's direction seems to be driven more by the 
level of market risk aversion and the Euro currently.
Markets Haunted by Greece as EU Lacks Measures 

to Deal with Its Leave or Stay

Whether Greece will leave the Eurozone continued to be the main topic of the week and given the lack of the concrete measures decided in the informal EU summit to handle the crisis, financial markets remained under pressure. In the commodity sector, crude oil prices declined for the fourth consecutive week amid the focus on macroeconomic factors while fundamental and geopolitical issues took a back seat. Gold was also weighed down as the yellow metal moved more inline with the diving euro than as a safe haven asset in recent weeks.

The informal EU summit ended with no concrete resolutions to deal with the sovereign debt crisis in the region. While it has become certain than the majority of leaders prefer Greece to stay in the 17-nation bloc, there’s no measures to handle the radical leftists’ demand for abandoning the austerity measures The EU leaders pledged to stimulate growth and stated that member states would endeavor to bolster growth around the three pillars: mobilization of EU policies to fully support growth, acceleration of efforts to finance the economy through investments and strengthening job-creation. Yet, details of the growth plan were no change from those announced earlier in the week, with key measures being introduction of "project bonds" as a "pilot scheme" with 230M euro being allocated to the scheme, expansion of the European Investment Bank (EIB) capital and mobilization of European structural funds.

The next major events regarding the issue would be the ECB meeting in June, followed by the Greece election on June 17 and the G-20 meeting on June 18-19. We believe market volatility will continue to be great before and after these events.

Precious Metals

The complex continued to undergo correction as political uncertainty in the Eurozone remained. Gold price dropped, reversing the short-covering rebound in the prior week, as the US dollar strengthened. In the near-term, gold, as well as other precious metals, is expected to be pressured as the euro tumbles.
For the yellow metal to turn more positive, physical demand is the key. Indeed, sovereign buying has remained robust despite the recent turmoil, signaling official sectors’ confidence in gold positive. For physical ETF, holdings have stayed positive despite recent softness. However, retail purchases of the metal in Asia, especially China and India, have shown fatigue.
PGM prices fell with benchmark contracts for both platinum and palladium losing more than -2.05 last week. Investment demand was weak, sending prices lower despite renewed labor strike in South Africa. According to the latest forecasts from Johnson Matheson, platinum will remain in surplus in 2012 palladium will turn into deficit due to reduction in Russian state stock supplies, rise in auto-catalyst demand and robust ETF investment.

YOU SHOULD NOT TAKE ANY MATERIAL posted on this BLOG AS RECOMMENDATIONS TO BUY OR SELL GOLD OR ANY OTHER INVESTMENT VEHICLE LISTED.

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.