-- Posted Thursday, 16 April 2009 | Digg This Article
| Source: GoldSeek.com
June Gold: Open= 893.0 High=894.9 Low=873.0 Last= 876.2 -17.3
The price of gold fell $17.3 dollars today, after three consecutive days of trying to move above $893.0. It appears bulls simply lost momentum and the gold market lost ground throughout the day as the stock markets strengthened. The US dollar was higher, but without much pizzazz, though it did gain against all the major currencies. The currency appears to be consolidating in a triangle pattern on the charts, right around the 85.00 level. The next major move could be higher or lower at this stage.
On the economic front, a better than expected initial jobless claims figure was released but was tempered by an increase in the overall jobless claims and a major slump in new home starts. Continuing a trend of better than expected first quarter earnings reports, both JPMorgan Chase and Google provided nice surprises for stocks. Some hand-wringing is bound to increase as May 4th approaches, which is the day the government begins releasing the bank stress-test results. The interesting note here is that the banks regularly undergo such tests but those results are bound by law to remain secret.
Moving back to gold, the bias is still towards the downside. Not only are gold bugs not sure whether inflation or deflation will play out in the short term but the threat of major IMF gold sales hang over the market. It is highly unlikely the Obama Administration will stop the proposed sales so some investors fear that the selling is right around the corner. And why buy gold now if massive physical gold sales are in the near future? That cautiousness is causing gold to fall under its own weight.
The short term trend is clearly down, but the overall trend is technically still higher until the market breaks the $814 price level, which sits around the 61.8% Fibonacci retracement level. Given the uncertain economic direction and the uneven performance in gold, buyers ought to be patient and wait for some type of bottoming action to develop or buy when the pattern of lower highs is broken.
The next downside target for gold is near $860, which would be a 50% pullback. A retracement to the 61.8 Fibonacci level would be to the $820 level. Resistance is found at $890, $895, and $914.
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-- Posted Thursday, 16 April 2009 | Digg This Article | Source: GoldSeek.com
