Strong weekly close in Gold

Gold was able to close the week out on a very strong note, although some traders did decide to cash in some profits ahead of the weekend, after getting a nice run of some $65 off of last week’s close as of Thursday’s peak price. Even in spite of the light round of profit taking, gold still managed to put in a very solid WEEKLY close surrendering only about $15 off its best level of the week and closing within striking range of $1800, the top of the heavy resistance zone noted on the price chart.


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Gold Price – Choppy trading pattern continues

Gold currently seems unable to better the level near $1750 which is proving to be rather stubborn. There appears to be a bit of a headwind arising from lingering fears about Greece and a potential slowdown impact on the global economy as debt issues remain in the back of traders’ minds. That was trumped the other day by Chairman Bernanke’s promise of another 18 months or more of free money but in today’s session, apparently the effect has been somewhat muted. I am noticing that equities are lower today and the Dollar has managed a bit of a bounce with bonds moving up slightly off of their worst levels of the session and are now unchanged. One can spot the “risk aversion” trades in the session.


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Notes on today’s Silver Chart

Silver is responding to the “Free Money” environment being maintained by the Fed to keep the US economy limping along as it shot higher when the Dollar dropped lower and fell below the 79 level on the USDX chart.

It is once again knocking on the door of a heretofore very stubborn level of chart resistance that begins at today’s high and extends into the region just north of $35. If silver is going to mount a breakout move and start a trend higher, the bulls must beat back the selling that is going to come in at this level. If they do, they have a very good shot at a rather quick move to $40.

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Gold Bulls unable to break through resistance

Today’s payrolls number, something which I might add is more akin to an Alice in Wonderland creation, was the factor responsible for the selling in both gold and in silver. The thinking was that if the economy is gathering steam at such a fast clip as the numbers suggest, then any notion of additional QE3 is a pipe dream. That means no Dollar debasement and little to fear on the inflation front so out came the sellers in the gold market. It also did not help the bullish cause that the market failed at a critical technical resistance level.


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Euro Gold comments

Once again, as has been the recent pattern in the gold market, gold priced in terms of the Euro, or “EuroGold”, is putting in a very strong showing in today’s trading session. If you note on the weekly chart, it has moved to within about 32 euros of its former all time high in price. Many traders/investors may be dismissing European Sovereign debt issues, but the gold market certainly has one eye on it.I want to see how this market acts now that we are moving into these regions as this will be a decent barometer of sentiment towards the woes surrounding Europe. Any further escalation of issues associated with those problems will carry this market to the all time high. The flip side becomes if traders feel that the worst is over and is behind them.


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Gold Chart

Gold bulls breached resistance at $1750 but have been unable to keep the market ABOVE that price. That will be necessary for them to set up a run towards $1775- $1780 where a major upside resistance level is located.


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Gold knocking on the door of resistance at $1750

One thing in particular that really stands out to me in today’s trading session is the resilience of the gold market even as the safe haven trades were being put back on by a decent sized contingent of traders. The Euro got knocked down about 50 points and the US Dollar saw a pop higher as traders were expressing signs of nervousness over both Greece and now Portugal. Additionally, the long bond rallied up nearly a full point and is once again at the top end of a trading range that is now three months in duration.


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What is euro gold telling us ?

Gold priced in terms of the Euro continues to be most impressive on the chart as it creeps ever closer to its all time high. This move upwards is a visual telegraph that there remains deep-seated concerns over the European sovereign debt situation, especially on the Continent itself, in spite of the recent euphoria over “free money” for the next two years.


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Money Flowing back into Commodities

Note the CCI chart and the nearly vertical lift over the last week. Money is pouring back into RISK ASSETS as the Dollar heads lower and the Fed keeps interest rates so low that money is free. This is the perfect environment for the wild-eyed speculator, especially the hedge fund types, who ADORE LEVERAGE and will shove as much money as they can wrap their fingers around into the commodity sector in anticipation of inflationary price rises.


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Some notes about HUI gold stocks index

We are seeing a definite reversal in the price action of the gold miners in comparison to the action in the broader equity markets in today’s session. I am not sure of the reason but whatever it is, the result is that the mining shares are finally seeing a strong bid in comparison to the broader equity markets.

As most gold mining shareholders have been all too painfully aware of by now, the mining shares have been lagging the broader market for the last 6 months or so now. Notice the peak last summer and the progression lower, particularly at the end of last year.

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Gold regains half of its losses from the record peak price

Technicians make a big deal out of the 50% Fibonacci retracement level due to the psychological implications of that level in the minds of traders, both bulls and bears. Generally speaking,  those who have been on the wrong side of a trade and who have very deep pockets, will oftentimes allow the market to continuing moving against them while they wait for the inevitable price retracement, either higher or lower depending on which side of the market that they are on.


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Euro Gold right at Resistance level

Take a look at the following chart of gold priced in Euros, or “Euro-Gold” as I prefer to term it. I have mentioned here and on some of my KWN Weekly Metals Wrap that this chart is one that all gold traders must continue to reference if they are to get a proper handle on the technical aspects of this market. The reason for this is that the issue most shaking the gold market during the “risk off” trades was the mess in the sovereign debt situation of many countries in the Euro-Zone.


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