Gold Prices Updates For Commodity Market
Gold prices in the short term continue to look overall bearish
. Old news, which is being twisted into new headlines, is once again front and center. Spain, Italy, Iran, the US economy, quantitative easing and the old economic issues in America, Europe and China remain the dominant stories of the day.
Spain had taken over news headlines as the markets focused on the interest rates Spain is being forced to pay to borrow funds. Anything over 6% in ten year Spanish notes is considered the line in the sand. Luckily Spain did not have to pay that today. Anything beyond 6% is what the market considers to be too high of an interest rate for Spain to be able to pay and turn its economy around. Interest rates poked their head over that amount on Tuesday, but todays action went at 5.4%. This amount is still 25 bps more than Spain paid several months ago.
IMFs Legarde said today that there is no need for IMF help for Spain at the moment, but she made it clear that help is clearly going to be there if needed. A new problem now surfacing is a downgrade by Moodys of French sovereign debt. The rumor of this started via a research note released Wednesday by Citi analysts who said they believed Moody's Investors Service Inc. would put France's triple-A rating "on review for a possible downgrade by the autumn." Autumn is around the corner.
Since my last report,
gold updates has stayed range bound. The range of roughly $1680 down to todays low of $1631.2 is what Im talking about. Copper prices have been collapsing. This collapse leads me to believe that inflation is not a theme as copper is used in construction of infrastructure of practically all types. Roads, buildings, housing and so on. With prices in a tailspin its hard to argue inflation in metals.
Energy prices havent offered much support to gold as they too have stayed range bound. Iran also isnt much of a factor since they were just given another 5-weeks before another meeting with them is set to take place.
Last, the US economy is not showing the robustness it did last quarter. The NY Fed and Philly Fed Reports both recently released showed slowdowns in their respective regions. Today we saw the number of Initial Weekly Jobs Claims decline, but the decline is a camouflage since the decline is from a sharp revision higher. Last week's expectation was for a number of 355K. Instead, the number came out at 380K. That number was revised today to 388K and from there we got a 2K reduction down to 386K today. So that leaves open the question of whether the job bump seen last month had to do with record warm weather, which pulled job employment forward. If so and we dont see job claims decline, the Fed would have the ammunition it needs to enact another round of stimulus, which would be bullish gold.
The Monthly chart pattern above is neutral to bearish as the Swingline Study continues to make lower highs (red arrows) and lower lows (yellow arrow). My guess is that if the market continues to work lower, it will find initial support against the 18-Month Moving Average of Closes, 1580.9.
In order for the current monthly chart pattern to turn its Swingline Study neutral (the study that shows the highs and lows on the above chart) prices would have to take out this weeks high of 1682.8. Until that occurs, I look for prices to work lower.
The one positive here is that very long term traders who use moving averages are probably looking at the 18-Week Moving Average of Closes and thinking that prices havent weakened enough in the whole time frame shown, to even get down and touch this chart study. That in itself is bullish and probably has longer term traders closing watching prices to see if this moving average is hit.
The Daily Chart is the shortest term chart I use and is the one most traders use.
On the Daily Chart shown below I added the momentum study, Slow Stochastics and an algorithm study that looks for support and resistance zones, Bollinger Bands.
This chart is bearish as is the Weekly Chart. The Bollinger Bands have done a nice job of alerting traders to where potential support lies. 1619 is the current price level where charts support is shown.
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by: Ctcalls
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