Gold Trend May 8, 2014 |
| Posted: 08 May 2014 05:44 AM PDT Follow The Raw & Let Your Dreams Come True Open Real Account ( Standard ) & Get Free €50 ( No Deposit Bonus ) This exclusive offer is available between 25/03/2014 and 25/06/2014 Join us now What You Waiting For?  Long Term ~ Neutral - Need a monthly close above 1800 to confirm the bull market final phase underway. Medium Term ~ Neutral – on the verge of full bearish trend again. Intermediate Term ~ Neutral – A close below 1272 is bearish and targets 1222-1240 Short Term ~ Bearish– Gold goes into Thursday holding by a hair and ready to turn bearish. Initial Resistance 1295-1305 2nd tier 1309-1315 Initial Support 1275-1282-1307 and 2nd tier 1287-1292 On our last update, initial resistance was listed at 1313-1323 and the high was 1315. Support was listed at 1297-1307 and 2nd tier at 1287-1292 and the low was 1286.60. As we listed yesterday, the biggie would be the Yellen day testimony and how gold is usually turned down for such an event, and gold had the potential to spike gold down, and that odds were on the downside, and gold perhaps was making its high for the week, and it was best to beware. We also listed that gold had reached 1st weekly resistance but we thought we would see 1322 before the setback would take place. However, we did not anticipate gold would trade this low so fast. What could have happened to start the sell off? NY COMEX had not even opened yet when the initial pulse lower began. I decided to review the market minute by minute and look at the world headlines, volumes and price. I spent over an hour and a half tonight to just satisfy myself. After failing for the third day to hold above our 1st weekly resistance (1312-1322) the dual gold channel line (the real 2014 uptrend line), Gold peaked one hour and 4 minutes into the London session at 1315 on a volume spike of 1200 contracts and moved from 1315 to 1310 by 6am. Gold was still trading in the 1309 region when 8 am arrived The market was still very thin with contracts trading hands from 7:46 to 8:02 AM EST at its highest less than 200 contracts per minute and for the most part mostly under 100 contracts per minute. In other words, the market was very thin and illiquid. At 8:03 am it was reported that President Putin and the OSCE head would discuss the Ukraine crisis. It went on to say that Putin said to OSCE head he was ready to discuss ways to resolve the Ukraine crisis. Two minutes passed and then the volume swelled from almost nothing to 1800 contracts in just one minute at 8:06 and the sell off was underway in gold. By 8:09 Treasuries and Bunds were at session lows and Stocks at session highs and the news was reporting this move was due to investors focusing on the Putin news and interpretation was it would pave the way for dialogue. Two minutes passed again and then volume swelled to 2200 contracts in one minute (8:09) and gold moved lower…..and here's the key, price broke the low of Tuesday. But then things leveled off until the open of NY COMEX. At 8:20 the COMEX opened with 1400 contracts and gold steady. However, at 8:21 the news line came through with an UPDATE………………. that investors should note that the market moving headline earlier with Putin and the OSCE head was from a meeting that took place on Monday----(48 hours earlier) !!!!!!! Once that news was out gold leveled off and held 1300 and traded 1301-1304 and at 8:30 after a government report showed a bigger decline (-1.7% down from +3.2%) in non-farm productivity than expected in the first quarter -----------GOLD DID ABSOLUTELY NOTHING and stayed in the tight range of 1301-1304. This portion of the morning 8:30 to 10:00 AM the following was observed; Gold had a softer tone going into the testimony. Dave Meger, director of metals trading with Vision Financial Markets, attributed this to three things – a partial recovery in the U.S. dollar after recent weakness, news that the China Gold Association said demand in the country for bars fell nearly 44% year-on-year in the first quarter, and investors perhaps fretful that Yellen would in fact be upbeat. This prompted some selling in the form of profit-taking ahead of her appearance, Meger said. Ok, so what transpired in the morning? As far as the US dollar, it closed Tuesday at 79.12 and opened on Wednesday at 79.14 and the high for the day was 79.24. That means that the USD opened 2 TICKS HIGHER and only got 12 TICKS HIGHER at its highs for the day !! In other words, there was no partial recovery. Just trendless trade. It should be noted that the China Association report was 3.5 HOURS BEFORE the selloff began. And what is most odd --- it was a CORRECTION NEWS LINE for China gold output and bearish overall news in the story. Here is the news line from Reuters that appeared at 4:30 AM EST Note paragraph 5 ( I have bolded it) Look at the headline --- CORRECTED in bold letters: HUH ? CORRECTED-China gold bar consumption slumps in Q1 - association (Corrects figures for total gold output and pct rise in 5th paragraph) May 7 (Reuters) - China's demand for gold bars fell nearly 44 percent in the first quarter of 2014 from a year ago, even as total gold consumption edged up about 0.8 percent during this period, the China Gold Association said on Wednesday. Total gold consumption was 322.99 tonnes in the January to March period, up 2.45 tonnes from a year ago. Out of this total, gold jewellery purchases jumped 30.2 percent from a year ago to 232.53 tonnes, but consumption of gold bars dropped 43.56 percent to 67.95 tonnes, the association said in a statement on its website. The slump in demand for gold bars, commonly used as either gifts or for investment, comes as a fall in the price of gold had hurt confidence amongst investors, Song Xin, president of the association, was quoted as saying in a report by the state news agency Xinhua. Analysts cited by Xinhua said a crackdown on corruption launched by Beijing and stricter rules on the types of gifts government officials can receive has also hurt demand for gold bars. China's total gold production in the first quarter rose 7.3 percent from a year ago to 96.5 tonnes, the association said. The World Gold Council expects China's gold demand to maintain a growth rate of between 20-25 percent in the next four years. The gold price stayed between 1311 and 1313 over the next hour after this report and above 1309 into 8 AM. How about the last line of the article that said profit taking was prompted before the Yellen testimony? There was absolutely nothing for headlines that affected gold from into 10:00 AM EST NY TIME and gold drifted in a tight range. At 10 AM EST --- GOLD WAS STILL ABOVE 1300. But at 10:01 7000 contracts hit the floor (700,000 ounces) and gold plunged from 1301 to 1293. And that was it for the next 90 minutes with gold barely trading any volume. It stayed that way until Europe closed. Within 20 minutes gold was trading 1000 to 2000 contracts per minute instead of 200. Gold finally made its low at 12:21 EST NY TIME at 1286.60. In summary, though I can't prove anything, it seemed like a very odd day to me. The majority of the selloff was complete before Yellen started to testify. Here's the biggie for/Thursday... More Yellen Testimony and The ECB rate decision. The BoE also meets on Thursday. China will release April trade data – this is a key data release following the disappointing trade reports in the year to date. This takes us to Friday where Chinese CPI, UK industrial production and JOLTs job openings round out the week's calendar. Gold short term Gold was totally rejected at the 2014 uptrend line three times this week and finally plunged to the last meaningful uptrend line we have on the chart. The 2014 downtrend line is the other support in the 1277-1281 area. A lot of gold longs are most likely near the exit door. Yellen testifies again on Thursday morning. Manipulated or not the reason at the moment is secondary. Gold lcould very well tank from here. It has spent the last 16 hours trading 1287-1293 just trying to hold the trend line. The longer it spends the more likely the drop will take place.  See Why VantageFx ? _Trade with Winners: Australian financial service providers, Vantage FX, have received a multitude of awards over the years including those from IB Times, Deal Makers, The World Finance Foreign Exchange Awards, Smart Investor and many more. _Vantage FX have: Award-winning Execution Speeds Competitive spreads from 0.0 pips 24/5 Premium Customer Support _Trade with Choice: Take your pick. 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Even though most of the time you may claim your money back,the time wasted is never returned. You should have used that time to learn how to trade! Read it!    YOU SHOULD NOT TAKE ANY MATERIAL posted on this BLOG AS RECOMMENDATIONS TO BUY OR SELL GOLD OR ANY OTHER INVESTMENT VEHICLE LISTED. Do your own due diligence. No one knows tomorrow's price or circumstance. I intend to portray my thoughts and ideas on the subject which may s be used as a tool for the reader. I do not accept responsibility for being incorrect in my speculations on market trend. King Regards  |
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