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Gold Market Analysis

June gold continues to struggle to hold above $1,650 this morning on the charts and some bulls might be a little discouraged by the lack of definitive upside action in the face of higher equities and supportive currency market action. Apparently anxiety toward Spanish debt is in check this morning, but traders are still fearful of demand toward longer maturity issues from that country directly ahead. In the short term, global macro economic sentiment seems to have improved slightly, as sentiment for US corporate earnings is providing some confidence. Unfortunately, the gold market was presented with more news of rising gold production as Polyus Gold reported a 27% jump in its 1st quarter refined gold production. Another element that could serve to hold gold prices down, are residual concerns of slack demand from India into a key festival date ahead, as Indian gold buyers are still somewhat concerned about the economic outlook and they are also somewhat put off by prices. With a key Indian festival on April 24th, there might be some expectations of improving demand in the coming sessions, but long term investors in gold should monitor Indian gold activity in the coming days for a sign of things to come! It is also possible that a recent import flap in India and strike by Indian jewelers has prompted some gold investors to back away from gold as an investment. At least in the early action today, gold could be in a position to temporarily benefit from outside market conditions, especially if some big name US stocks manage to post decent earnings news later today. Comex Gold Stocks were unchanged at 10.993 million ounces. Gold stocks have declined in 13 of the last 20 days. Critical support in June gold today is seen at $1,646.30 but the pattern of lower highs seems to leave considerable overhead resistance hanging over prices. With the markets concerned about slack Indian demand, residual concern toward European debt and neither the US or Chinese economies poised to impress, we would suggest that gold players remain defensive. Down trend channel resistance is seen up at $1,675.80 today and that resistance falls down to $1,674.10 on Wednesday. Declining open interest in gold also suggests that traders are seeing the investment buzz for gold falling, probably because the prospect of inflation has been downgraded, with the events of the last 3 months. Short term traders might be advised to sell June gold on a bounce to $1,663, with a near term objective of $1,632.

Technical Analysis

COMEX GOLD (APR): Stochastics are at mid-range but trending higher, which should reinforce a move higher if resistance levels are taken out. The market back below the 18-day moving average suggests the intermediate-term trend could be turning down. It is a slightly negative indicator that the close was lower than the pivot swing number. The next upside objective is 1665.3. The next area of resistance is around 1658.3 and 1665.3, while 1st support hits today at 1642.7 and below there at 1634.2.

 

StockMarketNews Research Team

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