Gold Trend 07/June/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=Bearish –need a close above 1448 for bullish
Short Term=Bullish close below 1392 bearish--close below 1383 bears could take control. Got to hold 1353-1357.
*note – short term cycles due to peak this week. June 7th (plus or minus 72 hours)
Support and Resistance
(NOTE JUNE GOLD NUMBERS)
Initial Resistance 1416-1426 and 2nd tier 1436-1444
Initial Support 1388-1398 and 2nd tier 1377-1383

GoldTrends Overview

From a chart standpoint Thursday’s action was an outside day (higher high and lower low) and the close was in the middle. If the close was on the high it would favor much higher prices but it did clear the stops and sets up for the NFP report that comes out in the morning. It will be the market mover of the day. If the report is bad, it should be good for gold, even if just for a day. But what will it be ?

My source called “Darth” has been right on calling the economic conditions and he had this to say about it. (experts expect 163 K)

Here’s what “Darth” thinks of te current situation. (in italics)

What I had to say months and weeks ago was it would weaken in this time frame for many reasons.

1. The first part of the year was goosed big by seasonal changed a year or so ago. It normally falls off after the May number, and actually starts to be seasonal "drag.”

2. The first part of the year was goosed by Gov/military spending to beat the sequester (extension).

3. Most of the first 3-4 months numbers were the result of pushing a huge number of full time people to

part time. Thus they went out and got second jobs, or third jobs, but worked the same number of jobs. If the BLS calls you up and you say you have to part time jobs, they count that as two jobs, or three.

4. Taxes by nature slow and already slowing economy, here and abroad.

5. The spring hiring, Easter spending, and outdoor spending is over.

6. Housing is all hopium and already shutting down. Besides, 2/3 of it has been multifamily and that’s not good---single family housing up to about 300k has revived but above that level is spotty at best outside primary costal markets. Midwest for example still down 30%.

My call last weekend was for a number in the low 100's and possibly lower. I also stated a sub 100k number was possible and now that the pund-idiots have seen ADP they have joined my early assessment. Having seen it now myself a sub 100k number is very possible and it could be surprisingly week.

As I said when the fed experiment was initiated a few weeks ago, they might taper 5 billion or 10, only to increase it by 50 billion (towards 125 bill per month). By the way, they were backing off that experiment by 11 pm the same night by another fed speaker trying to calm the risk on/off idiots.

The results are they themselves have helped exhaust the hopium high and given how broken the system is, it will be very hard to re inflate the sheep's bladder. Which will in turn demand more, not less money being pumped in. However, there is so little mortgage paper being written (2/3 of mortgage apps are refinance) that they are having a hard time looking out real far and knowing they can buy it---no one will sell the higher rate paper unless it is way underwater. (Yes, the fed is buying the lowest quality underwater mortgages for 100 cents on the dollar, bailing out the banks, and using your tax money, or money they make that would otherwise go back to the treasury and now isn't).

Conclusion
If “Darth” is correct the metals should get a spike higher, even if only for a day.

Gold prices drifted lower all the way to 1391 before a turn up to 1409 and then back to 1401. But when the YEN rallied sharply by 3% on the heels of a strong Euro, the US dollar got pummeled big time and gold ran up to 1423 in an hour’s time before peaking at the hourly purple trend line and spending the latter part of the day pulling back to 1411. We discussed that the emergency G7 meeting last month was probably in lieu of the collapse of the Yen and the danger it was bringing on to the market. And since then the Yen has indeed had its strongest reaction move since the collapse began. The concern is the massive move up in interest rates on a % basis where there have been two lock limit moves in Japanese bonds. The rise in rates was enough to send panic to the control boyz as Japan’s debt is so huge that interest rates could be and end game should they continue higher.

In response the NIKKI stock exchange has dropped 17% in a week but we have to remember the huge move up since October. But is the Yen really that big to the gold market?

The chart below shows the major high in gold in 2011 and the highest price in gold in 2012 was exactly at the Yen’s turn. When the control boyz set up for this huge yen drop, the hot money moved from gold to the revived Yen carry trade. The drop in the yen is very close to the drop in gold on a percentage basis. (over 30%).

What Next?

Support is the 1383-1395 zone. An hourly close below 1392 puts the short term in bearish mode. It takes a close above 1425 for a bullish reading. The NFP report will be the deciding factor and if “Darth” is right the number should be below expectations. If we get a big gold spike, then we could move to as high as 1438-1444. That would be the ideal point as the top of the blue channel line at the cycle peak would be a perfect setup for a pullback next week.

Bottom Line

We’re neutral, choppy and overlapping on the short term and when prices are in this mode, they can turn down at any time.

With a cycle change in process , the next two week trend is about to develop between now and Monday. The last two weeks gave us upside, but it was a weak pattern. Once this next trend is underway it should last into the 21st of the month.

The control boyz will be in charge with NFP --- but a spike higher could definitely come in play. FINALLY REMEMBER THIS --------FRIDAY’S HAVE BEEN very ugly for gold and it was again last week. With the chop and overlap we’ve had, it makes for risky trade

 

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