-- Posted Tuesday, 10 March 2009 | Digg This Article
| Source: GoldSeek.com
April Gold: Open= 914.9 High=918.3 Low=891.1 Last= 899.0 -15.9
The uptrend in gold is being put to the test today. The trend of higher lows goes back all the way to mid-November and bears are putting that trend-line to the test of the past few sessions. A close below $906 would technically penetrate the trend-line but it takes two consecutive closes below the trend-line to 'break’. If such an occurrence takes place, downside targets could range as low as $820 per ounce. From the Oct/Nov lows to the mid-Feb high at $1002, prices have completed a 38.2% retracement. A 50% pullback would be to $855 and a full 61.8% retracement is down at $820.
The weekly gold chart is a bit more ominous looking, with an island-top appearing from two weeks ago during the run up to $1000. Prices will likely move lower over the next few weeks in order to probe for deeper support. For the moment, there is some relief in the financial market that the sky has not completely fallen yet.
A strong equity market proved too much resistance for gold bulls, and the shocking report this morning was Citi Groups was operating with a profit for the first two months of 2009. This should be tempered with the fact that this disclosure declined to state how large credit losses and other one-time expenses were. Also, AT&T announced plans to fill 3,000 positions this year to support its wireless, broadband, and video business. At the moment, the market too any positive sign to help spark a relief rally.
How long this rally last may depend on consumers. The relief felt today could soon be replaced by agony again if some analysts’ predictions of tightening consumer credit pans out. Meredith Whitney warned that “credit cards are the next credit crunch.” Many Americans rely on credit cards to bridge monthly budgets and any tightening of credit lines could cause plenty of complications. Whitney also mentioned that the last quarter of 2008 saw available lines of credit reduce some $500 billion and estimates that number could grow five-fold in the next two years.
There are still grim warnings that the economy may not rebound at all this year and the potential for inflation and currency failures is real. But for the moment, gold bulls need to be patient as there is little use in fighting a market that no longer responds to bullish stimuli. Prices will likely probe lower to discover where stronger price support exists.
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-- Posted Tuesday, 10 March 2009 | Digg This Article | Source: GoldSeek.com
