Bill Downey: While an initial lower low was rejected overnight, price has popped right back to resistance on the hourly chart and is threatening to break above the dual channel lines. While gold saw some initial pressure from the release of the FOMC meeting minutes yesterday, the markets seem to have judged the last Fed meeting as a fairly neutral event. However, gold is managing to shake off adverse currency market action and reports of slack Indian physical demand. Reports that Indian jewelry exports in July declined sharply has prompted talk that the previously implemented Indian gold import restrictions and or the uncertainty in the Indian currency and economy have disrupted normal business throughout India. However, gold is probably drafting some fresh support from favorable Chinese and European economic data that was released overnight. Given the recent positive correlation with favorable economic results, gold might expect to see some minor pressure in the wake of US claims data later this morning but then gold might see some fresh support in the wake of the leading indicators report which was expected to post some fairly impressive gains. Gold might be expected to begin to draft support from rising tensions in South African wage discussions, especially since the 30 day mediation window is set to close, as early as Friday! Apparently strikes are being threatened in both the South African mining sector and in the South African Construction sector. South African gold shares were under pressure as a result of the civil unrest and that probably serves to undermine gold prices somewhat this morning. Gold probably saw minor support from news of a slight build in gold derivative holdings yesterday afternoon.
Hong Kong shares were initially weaker but managed to regain positive traction and close higher in the wake of positive Chinese economic news. The Nikkei was also lower in an apparent slide off lingering fears of tapering in the US. European shares were higher to start in the wake of favorable Euro zone and Chinese economic data, which would also seem to suggest that European investors simply aren’t as concerned about US tapering as other sectors of the globe. US equities were higher to start today, as the market appears to be temporarily relieved that the Fed was mostly balanced in its views toward the taper/no taper decision in the months ahead. However, the markets might continue to react to US scheduled data, as the presence of positive data this morning is likely to give credence to some move to taper in the near future. The US economic report slate today includes initial claims, leading indicators, a KC Fed manufacturing report and a US home price index. Expectations call for claims to have built on the week, but that news might be uncharacteristically countervailed by lofty expectations for a gain in the leaders report.
Both pullbacks from gold this week have supported in the 1352 and 1355 area. Short term cycles are due to turn in this time frame but the continued support so far allows for further upside as we’ve been discussing on the website. It’s possible to make one more high on Friday and still turn the trend down into early September before the next move up. However, due to the strength we are seeing with each pullback attempt, it is always possible for this new short term trend to invert and continue higher into the Sept 3rd date. Resistance is the 1381-1387 area and any close above 1388 favors 1400 or 1423 as the next gold target. Support is the 1344-1354 area with the ideal at around 1352. In summary, there is still potential for upside. The dual channel line seems to be the point of turn. If we close above the white lines, the potential for higher prices into Friday will be favored. Thus watch the 1382 to 1387 area as resistance in gold as the key to whether we move higher or not.
Silver is the same story as gold. So far it doesn’t want to sell off. There have been two pullback attempts that so far have been supported with buying coming into the market. Resistance is the 23.60-24.20 area and then at 25.10. Support is the 22.30-22.50 area and then at 21.00-21.35 zone. So far the pullback seems to be showing strength and we can’t rule out a test of higher prices as we move towards Friday. IF we move close above the 23.70 area then 24.20 and 25.10 would come into play.(...)Click here to continue reading the original ETFDailyNews.com article: Gold and Silver In Range Bound Trading Since FOMC On WednesdayYou are viewing an abbreviated republication of ETF Daily News content. You can find full ETF Daily News articles on (www.etfdailynews.com)
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