07 Sep 2011
|
1st resistance
|
2nd resistance
|
3rd resistance
|
Today’s
resistance US$
|
1910
|
1947
|
1972
|
1st support
|
2nd support
|
3rd support
|
|
Today’s
support US$
|
1848
|
1823
|
1787
|
Today’s
pivot point US$
|
1885
|
Daily Gold and Silver Expected Range:
Gold: US$1846 - $1920
Silver: US$40.20 - $43.30
The Day’s
Story:
Spot Gold experience one of the most volatile sessions
in living memory as it bounced between gains and loses throughout the session.
Gold eventually finished with sharp losses after rising earlier to fresh all
time high of $1920.8 an ounce. Gold nosedived earlier during European session
when Swiss National Bank announced to peg its currency to the value of Euro.
Some profit taking also kicked in as investors moved their money into equities
during European session. Gold however, quickly pared those losses but remained
in seesaw mode when stocks in U.S traded deep in red. Some positive ISM data also
dented gold's safe haven appeal and forced gold bulls to back off during later
part of U.S session. Stronger dollar was another major factor for gold's
demise.
officials come out with a concrete plan to address the
issue.
Last week, bullion finished with strong gains making
it eighth weeks of gains out of nine. Gold price has recovered almost all its
previous week’s losses in the wake of renewed worries over pace of global
economic recovery. Gold gained 12% in August after advancing 9% in July and is
up 39% this year outperforming global stocks, commodities and Treasuries, and
is set to post 11th straight year of gains. Gold had a choppy month in August,
peaking at a record $1,914 an ounce and trading within its biggest range in
absolute terms since January 1980, when it hit a record $835 an ounce, or above
$2,000 in inflation-adjusted terms.
Coming Up:
Looking ahead, UK's industrial and manufacturing
production along with German industrial production data will be keenly watched
by investors. Later, FED's Beige book economic survey is the only economic
report to watch for during U.S session.
Keep an eye at U.S dollar and crude oil prices as
usual for further indication. Eurozone debt crisis and fears of recession in
U.S are likely to keep gold's safe haven bid alive in coming days but a rebound
in equity markets will call for further losses in precious metal.
What’s
Happening on Charts?
On daily charts, Price found support at 20 DMA at
recent dip last week and trading above 20, 50 and 100 DMAs. As long as price
stays above those levels upside momentum stays in place. Bollinger bands have
turned flat and price looks exhaustive at these levels but still have room to
move further up.
RSI (14) is making its way down towards 50 level
without visiting overbought territory in its latest move suggesting some
bearish strength. RSI also failed to make a new high despite gold rising to
fresh all time high yesterday which is considered a strong reversal signal
although in current market conditions gold has negated such a signal few times
in recent weeks. MACD, however is well
established in bullish zone but due to its lagging nature we focus more at RSI
and Stochastics along with candlestick patterns and other chart indicators and
take cue from MACD for trend confirmation. Slow Stochastics (8,3,5), which have
been quite accurate lately in pointing towards price reversals, have landed in
overbought territory and like RSI failed to make new high. Considering recent
history overbought conditions can prevail for quite sometime. Stochastics is
more responsive indicator compared to RSI and MACD but at the same time it does
give lot more false signals so we need to combine all chart studies and trade
accordingly.
Overall, candles and technical indicators show no
serious technical damage for gold bulls after yesterday’s price fall. We can
look for $1900, 1914 & 1920 for immediate resistance levels. A successful
break above that level will confirm resumption of uptrend and will call for
magical $2K mark if fundamentals keep outweighing technicals. Gold will find
support at $1860-93 & 1846-50 levels. A successful break below that level
will send prices to $1828-32. However, if stock markets reverse their recent
losses and heightened risk for double dip recession abates, we will see strong
technical selling for a much deeper correction and test of recent market low of
1705. On the other hand, Eurozone debt worries; hopes for QE3 and fears of
double dip recession will negate any technical indications in coming days.
Please do combine you technical studies with
fundamentals for better results so please keep an eye on things from U.S.,
Eurozone along with dollar and oil price movement for further indication. Key
economic reports from Asia, Europe and U.S also impact prices and need to be
closely watched.
Dollar Index:
U.S dollar index a gauge, which measures dollar
against basket of six major currencies rose for fifth straight session suggesting
near market low has been in place. Greenback reversed its earlier loses after
Swiss National Bank’s move to peg its currency with Euro exchange rate.
Dollar’s main rival Euro traded both side of breakeven
level but ended sharply down, falling below 1.40 level since July 12. Dollar also posted strong gains against
British Pound and Japanese Yen. But the major strength factor was a Dollar’s
9.7% gain against Swiss Franc. Reserve currency’s latest price action suggests a
near term market low is in place but a major reversal cannot be confirmed as
yet as dollar faces strong headwinds due to rising expectations of QE3. Going
forward, we expect directionless trading, as market will wait further
indications from FED in its two days policy meeting next Wednesday while
worsening debt crisis in Europe will also keep a lid on Euro’s gains.
Emerging
Chart Pattern:
Pattern: Rising Channel
Trend: Up
Period: 30 Min
Length: (Periods): 240
Pattern
Ends: 0200 GMT (07/09/2011)
Strength: Average
Major World
Indexes:
Indexes
|
Close
|
% Change
|
DJIA
|
11139.30
|
0.90
|
S&P
500
|
1165.24
|
0.74
|
NASDAQ
|
2473.83
|
0.26
|
FTSE
100
|
5156.84
|
1.06
|
DAX
30
|
5193.97
|
1.00
|
CAC
40
|
2965.64
|
1.13
|
*NIKKEI
225
|
8723.04
|
1.54
|
*CSI
300
|
2742.93
|
0.72
|
*HANG
SENG
|
19878.80
|
0.85
|
* Today’s
Data
2011 Price
History:
Month
|
Open Price
|
Close
Price
|
Change ($)
|
High
|
Low
|
January
|
1417
|
1341
|
68
|
1424
|
1307
|
February
|
1341
|
1410
|
69
|
1435
|
1324
|
March
|
1410
|
1432
|
22
|
1447
|
1380
|
April
|
1431
|
1563
|
132
|
1569
|
1412
|
May
|
1562
|
1539
|
23
|
1576
|
1462
|
June
|
1539
|
1499
|
40
|
1558
|
1490
|
July
|
1486
|
1626
|
140
|
1632
|
1478
|
August
|
1626
|
1825
|
199
|
1912
|
1607
|
*September
|
1825
|
1874
|
49
|
1920
|
1813
|
* Current
Month
Important
Economic Data:
DATE
|
Event
|
Country
|
Forecast
|
Previous
|
07/09/2011
|
Industrial Production (YoY) (JUL)
|
UK
|
-0.4%
|
-0.3%
|
07/09/2011
|
Manufacturing Production (YoY) (JUL)
|
UK
|
1.90%
|
2.1%
|
07/09/2011
|
Industrial Production (MoM) (JUL)
|
UK
|
0.2%
|
0.0%
|
07/09/2011
|
German Industrial Production n.s.a. and w.d.a. (YoY)
(JUL)
|
EU
|
6.70%
|
6.7%
|
07/09/2011
|
Fed Releases Beige Book Economic Survey
|
USA
|
Other
Metals:
Silver futures for December delivery closed down 120 cents at
$41.87 an ounce on Tuesday.
Platinum futures for October delivery closed down $26.60 to
$1,858.20 an ounce on NYMEX.
Palladium futures for December delivery closed down $33.65 to
749.55 an ounce on NYMEX.
N.Y. Copper for December delivery closed down 7 cent at $4.06 a
pound on Tuesday.
Gold (News
and Views):
December Comex
gold closed down $3.60 at $1,873.30 an ounce on Tuesday.
The London P.M.
gold fixing was $1895.00 on Tuesday compared to its previous P.M fixing $1,895.00.
The dollar index,
which measures the U.S. currency against a basket of six major currencies, rose
0.74 to 75.92 on Tuesday.
Crude Oil for October
delivery finished down $0.43 at $86.02 on Tuesday on New York Mercantile
Exchange.
Gold hit its true
peak on Jan. 21, 1980, when it rose to $825.50 an ounce. Adjusted for inflation
in 1980 dollars, that translates to an all-time record of estimated $2,500 an
ounce, in 2011 dollars.
The gold-to-silver
ratio rose to 44.58 from 44.20 a day earlier.
In the Kitco News
Gold Survey, out of 34 participants, 25 responded this week. Of those 25
participants, 20 see prices up, while two see prices down, and three see prices
sideways or unchanged. Market participants include bullion dealers, investment
banks, futures traders and technical chart analysts.
Factors
Affecting Gold Price Yesterday (Experts Views):
A $65 move in the gold price is almost unprecedented,
says Ross Normal, chief executive officer of Sharps Pixley. "Huge
volatility in gold reflects what is going on in the rest of the markets."
Norman categorizes the move of the SNB as a plea,
"please don't pick me as a safe haven currency." It is hard to say
how many more investors will now buy gold as a result, but Norman says it would
probably help.
“Those long the Swiss franc are likely long gold, so
both positions are cut at the same time,” Sebastien Galy, senior currency
strategist at Societe Generale SA, said today in an e- mail. The move by the
Swiss bank “suggests that we will go ‘risk on’ now, which is not good for
gold.”
“We are seeing some profit taking,” Matthew Zeman, a
strategist at Kingsview Financial in Chicago, said in a telephone interview.
“The strength in the dollar is also pushing gold down.”
Gold Future
Outlook:
The biggest risk to gold prices is its high level.
Many analysts had been expecting a bigger pullback to the $1,650 area, but it
hasn't come. This chart gap is a "crack in the building," says Ross
Normal, chief executive officer of Sharps Pixley, but it's not a killer as long
as the VIX, the volatility index, stays over 30. If the VIX falls, meaning
investors feel better about stocks and the economic outlook, and gold still is
in overbought territory then lower prices could ensue.
Norman thinks the next $150 for gold will be to the
upside but whether it's sustainable is the question. "It depends on how
gold got to $2000."
"As we enter a seasonally strong period for gold
demand, we would expect price dips to find better support from appetite in
India, as well as the interest emerging from China," wrote Barclays
Capital in a recent note.
However, touching an intraday record only to end lower
hasn’t tarnished gold, said Scott Meyers, a senior trading analyst with Pioneer
Futures in New York.
“It didn’t settle above $1,900 but it is still a very,
very strong market,” Meyers said. “There’s this general fear of currencies
losing value at a rapid clip and you are going to see gold as a beneficiary of
a lot of money going into tangible assets.”
markets,” said Ong Yi Ling, investment analyst at
Phillip Futures in Singapore.
“In the short term, gold prices are going to be
underpinned by many supporting factors, whether it’s euro-zone debt concerns,
slowing growth in the U.S. and the potential for another round of quantitative
easing,” she said.
Technical
Analysis (by Jim Wyckoff):
Technically, December gold futures prices closed
nearer the session low Tuesday.
Gold market bulls' still have some upside momentum on
their side and their next upside technical objective is to produce a close
above major psychological resistance at $2,000.00.
Bears' next near-term downside price objective is
closing prices below solid technical support at $1,817.60.
First resistance is seen at $1,900.00 and then at the
August high of $1,917.90.
First support is seen at Tuesday's low of $1,861.80
and then at $1,850.00.
Wyckoff's
Market Rating: 8.5.
