Gold Trend 7/May/2013

Long Term-Neutral – Need a monthly close above 1490-1526 in May to regain Bullish status.
Medium Term=Bearish Need a close above 1650-1675 to neutralize.
Intermediate Term=Neutral –need a close below 1403 to return to downtrend.
Short Term=Neutral/bullish– resistance 1487-1494-- -- weekly support 1439-1449 and monthly at 1415-1425---close below 1439 and bearish. close above 1489 and full bullish.

Support and Resistance
(NOTE JUNE GOLD NUMBERS)
Initial Resistance 1472-1482 and 2nd tier 1497-1503
Initial Support 1448-1458 and 2nd tier 1429-1439

Gold Hourly Chart

Gold has so far held in this wedge of congestion. We’re always cautious when we see choppy and overlapping price patterns. We feel this one can break out but until it does, the control boyz could send it down first toward weekly support in the 1445 area and or monthly in the 1420 zone. We don’t favor that scenario at the moment, but longer term readers know that the choppy and overlapping price patterns are what kept us from being long most of this year. So while I’m looking for higher prices, I’m always concerned about choppy and overlapping price patterns. Every one of them this year has just about resulted in a sell off. However, now that we have what we feel is at least some type of meaningful low where gold tries to regain its bull market structure, a break out of this pattern higher would add a lot of meat that we’re in a medium term uptrend. A breakout above here should get us to 1500 right away and with a little bit of consolidation there, then a move to 1520-1540 is expected.

What Next

The next short term cycle turn window opens today and will remain so all week. At some point the current cycle ends and the new one begins. The standard deviation bell curve catches the majority of turns so at this point we watching for a dip or selloff to support points on the chart and there are quite a few. The most important are the weekly near 1440 and the monthly near 1420. The Friday low of 1455 and the weekly and monthly pivots at 1465 are all areas of interest. A move above 1487-1490 would most likely launch the move higher towards 1497-1503 and then the 1520 area. Tuesday is usually decision day as to whether we make a mid week high or low. Watch the 1455-1465 area as 1455 is the Friday low and 1465 is the weekly & monthly pivot. That’s the first area we’d look at as support on Tuesday. If not the 1440-1445 area would come in play. Resistance is the 1477-1489 area. The daily pivot is 1470 so 1470 is also a spot to watch.

Bottom Line

As long as we’re in the channel the short term trend is still up and we have to favor the upside to stay in play. But the market usually doesn’t make it that easy. If we drop hard for a few days to 1420 we’d favor a low point. If we drop below the support on the hourly charts and then close above 1487 we’d favor the new cycle move is in play.

In addition to our own analysts we read an awful lot of material. Here is a list of bull/bear points by Florian Grummes of Midas Touch Consulting.

Arguments for lower prices

• Gold broke down from huge descending triangle and out of 2 year sideways zone. The old support between US$1,520.00 and US$1,540.00 now is massive resistance. It will take more time to regain this level.

• Recent recovery in mining stocks seems to be kind of muted (but could also be bottoming phase..)

• Movement out of Gold ETFs might just have started

• Seasonality for precious metals until end of July unfavorable

• The strong physical demand by small investors (especially in Asia) and the rising premiums during the last three weeks could also be a contra indicator (e.g. in September 2008 we saw similar developments but final low was marked in November 2008)

• By devaluing its own currency Japan is exporting deflation to U.S. and Europe

• Europe continues to sink even deeper into recession

Arguments for higher prices

• Gold now is behaving quite detached from the stock market

• Potential bull flag points to test of 50-MA (US$1,537.46) and strong resistance around US$1,525.00

• COT Data very positive: Commercial Short Position at low levels last seen during deflationary crash in 2008. Small speculators have liquidated all their longs.

• Sentiment continues to be extremely bearish (Gold Public Opinion & Hulbert Gold still at multiyear lows, Central Fund of Canada trading below net asset value) and therefore a contrarian buy.

• Massive physical demand all over the world. Premiums for physical bullion still much higher.

• U.S. and European central bankers want to avoid deflation and will soon start to pump more liquidity into the system again

• Stock market reaching new highs while insiders are selling. German yellow press is headlining "DAX at new all-time highs". The article is suggesting that stocks can only go higher from here. A clear contrarian sell signal. As well "sell in May" seasonality points to a cyclical high in stocks. Gold has decoupled itself from stock market and might move higher after initial confusion/setback.

 

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