Gold Market Update

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Demand for physical Gold remains high on Friday, even as the price to invest in Gold eased modestly in choppy trade to $1,575.50 an ounce, while the price to invest in Silver inched higher to $28.52 an ounce, as the dollar remains strong, keeping the pressure on the metals as lawmakers gave up on trying to reach an agreement that would have averted the sequestration which will now kick in at midnight tonight.  More than $85 billion of the $1.2 trillion in across-the-board spending cuts will take effect as scheduled.

President Obama spoke at a news conference immediately following a brief meeting with top congressional leaders at the White House on Friday morning which failed to produce an agreement to replace the sequestration with cuts that would have less impact on the economy, which is still struggling. Because of the spending cuts “the economy will not grow as quickly as it would, unemployment will not go down as quickly as it would have,” said the president.

“I am not a dictator; I’m the president,” Obama said. If McConnell and Boehner want to leave town without a deal, “I can’t have Secret Service block the doorway.” The president is still hopeful for a deal, saying an agreement could come after voters affected by the cutbacks reach out to members of Congress in the coming days, weeks and months.

Meanwhile, "On Wednesday, Bernanke said something important that seemingly went under the radar: he sees unemployment at 6 percent around 2016," said UBS on Friday. "This is quite a dovish statement….As U.S. sequestration kicks off, headlines are likely to grab attention, and an escalation of concerns amid the political noise would offer upside risks ahead." Gold bounced following similar dovish comments from Fed Chairman Bernanke, but failed to advance above $1,620 during the week. 

Still, with a dovish Bernanke and sequestration due to kick off at midnight, it could "suggest that investors ought to keep an eye out for buying opportunities," said UBS.

Gold Chart

Gold’s drop to 1564 friday was at a position where there was no trend line or support associated with the drop and at that time had erased 55 out of a 65 dollar move up from the lows.  The move back to 1585 is where resistance is now seen on the purple trend line and where the weekly and daily pivot price point for the day resides.  The pullback to 1577 has gold on a downtrend support line. At the moment the trend is down as we’re below the green 200 hour moving average, and the purple channel line.  Our best take at the moment is resistance is at 1585-1590 and support at 1570-1576.  Unless a major flush happened today , odds favor testing the lower channel lines in the 1535-1555 area. There’s conflicting issues with price and cycles at the moment and that leaves some uncertainty in the markets.  With the low point having occurred where there are no support lines, I’m inclined to favor lower until we take out the 200 hour green moving average or begin to support above that purple line.  The choppy and overlap look of the price pattern also has me leaning towards the bears having the advantage.  In summary,  until proven otherwise by price the bears have the edge at the moment.

The Next Week

The gold markets fell slightly at the end of the session on Friday after going back and forth over the course of the day. We still see the $1550 level is offering support, so it appears that the market has no actual bid to it right now, but it simply isn’t week enough to collapse at this point. We also believe that the real support is down at the $1500 level, and because of this we think that a supportive candle somewhere in this general vicinity could be good enough to have a shot at bouncing.  

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GOLD CURRENT TRADE
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Our Position 
Bought 1Apr Gold on 28/02/2013

Entry: 1577

Stop Loss: 1552

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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