GOLD REPORT

Gold looks set to test the next support level of $845 to $850, he said in a note to clients.
"As expected, gold has once again experienced weakness in the summer doldrums, but a seasonal low is likely in the coming days, and the length of the consolidation since March should see a very sharp rally in gold's favored autumn months," said O'Byrne.
"Given [that] the financial and economic news has been as bad [as] if not worse than that out of the euro zone, the dollar rally is likely to be another dead-cat bounce," he warned. Thursday's U.S. data was "not encouraging with July sales and jobless numbers both disappointing."
So further dollar weakness is more than likely in the coming months, O'Byrne predicted, as the U.S. government "looks set to engage in a series of massive bailouts of banks, brokerages and possibly even car makers -- all of which face the possibility of insolvency."

BUY GOLD $865/55 area STOPLOSS $830 Target $1250

If gold can hold the $875-$876.50 area, "then it has a real good chance of rallying into December," said Dale Doelling, chief market technician at Trends In Commodities, in emailed comments. "The flip side is that near-term support areas are at $865 and $855 with major support at $848 [so] any close below $848 and I would call the bull market in gold over." the best way to protect yourself against a weaker dollar and the resulting inflation, along with persistent risks to the banking system, is to own physical goldBUY GOLD $860 with Stop Loss $830 Target $1250

GOLD MARKET UPDATE

"Gold is likely to remain on the defensive in the coming sessions," said James Moore, an analyst at TheBullionDesk.com, in a research note.
"While expectation of a U.S. rate hike have bolstered the dollar, the Fed is unlikely to make sharp rate increases for fear of damaging economic growth, and the question remains as to how many more financial institutions the Fed/Treasury is willing to bail out before it allows nature to run its course," Moore said.

Metals Cool, Looking for Support

The precious metals saw a cooling this week, due largely to the drop in oil prices and the strength that lended to the US Dollar and the Dow.Gold just broke below support at 959.48, and may be on its way to test 946.35. If the drop continues beyond that, then 929.13 is the next likely candidate for support. If we resume moving up, then 974.22 and 991.43 are the most likely resistance

GOLD REPORT

"With investor risk appetite showing a slight improvement and having posted aggressive gains last week, it comes as no surprise to see the metal correct," said James Moore, an analyst at TheBullionDesk.com.
He cast the current trading backdrop for gold in favorable terms.
"To avoid a deeper correction, gold needs to establish a base above the $953-$955 chart level, but given the backdrop of rising inflation and recessionary pressures and increased financial market jitters, we anticipate investors will view dips favorably, with the metal ultimately set to rechallenge $1,000," Moore said in a note.

BULLION MARKET UPDATE

The precious metals complex has been trading sideways since the beginning of the second quarter of this year. Gold has been in the $870-960 range. We believe this reflects the directionless performance in the US dollar as the two has been quite well correlated recently. Nevertheless we keep our bullish stance and we expect this range to be broken, and as it looks now, the probable outcome is to the upside. In general when the price has been in “balance” for a few months the break out is violent and the 1000usd target reached quickly. We need a daily close above $964 for August Gold (GCQ8) to trigger this move up. Equity market weakness and a potential escalation in geopolitical risk in the Middle East will be supportive to the metal.

Bullion Report

Gold has now on consecutive days tested the 100 day moving average at $915. Support remains at $915 and $900 should continue to provide strong support especially in the light of the increasing tensions with Iran. Although prices may need to consolidate at these levels prior to breaking through resistance at $945-$950 and rechallenging the psychological level of $1,000 per ounce.

Gold futures decline on higher dollar, weaker oil - Is this buying oppurtunity?

"I think we're seeing massive commodity liquidation today off the heels of a strong dollar and some general profit taking after yet another big commodity month in June," said Zachary Oxman, a senior trader at Wisdom Financial.
"Gold's recent ascent was quite rapid, and correction and consolidation can be expected," wrote Mark O'Byrne, director at Gold & Silver Investments Ltd., in a research report.
Gold prices should find support at the $915 and $900 levels, he said.
"Inflation will remain the topic du jour as the Bank of England follows the Fed and [European Central Bank] in trying to tread the dangerous tightrope of sharply declining growth and rising inflation or stagflation," O'Byrne said. James Steel, chief commodities analyst at HSBC expects gold prices to trade on a weak note this week. Buying Gold arround $900 for a target of $1000 in few weeks likely to be fruitful strategy.

GOLD WEEKLY UPDATE

A weaker US dollar and equity markets still on a sell mode provided a boost to gold prices this week, with August gold (gcq8) price rallying to $950, a one month high. We believe the US strength we witnessed on Thursday after Trichet comments was a knee-jerk reaction, we expect the US dollar to stay weak in the coming months and subsequently the 1.60 level against euro to go. We therefore maintain our bullish outlook for Gold and a retest of the $1000 level in the coming weeks.
More short term as Long as August Gold (gcq8/ygq8/zgq8) stays above $923 are we are looking for Gold to test the $953 area and subsequently $967 for next week as target.

ECB Increases Rates as Trichet Warns of 'Exploding' Inflation

Buying single currecy at falls likely to be fruitfull. The dollar looks set to fall through support at 1.60 in the coming days and 1.70 euro/dollar looks like a very real possibility by the end of September. Longer term, the likelihood of a sharp long recession in the U.S. could well see the euro reach 1.80 or even 2.00 against the dollar (as sterling did to the surprise of many in recent years).

Gold jumped more than 4% yesterday through major resistances

Precious Metals gained some speed yesterday. August Gold (gcq8) jumped more than 4% and broke at the same time the $865-912 range holding for a month. It is a significant move as it opens the way to $935-940. A daily close above $967 will imply a retest of the $1000 level at least . We continue to prefer the Long side as we expectfurther USD weakness.

"There is the risk that while the Federal Reserve has to an extent 'talked the talk' regarding inflation, it is failing to 'walk the walk' by raising interest rates in order to combat the real threat posed by surging inflation," wrote Mark O'Byrne, executive director of Gold and Silver Investments Ltd., in a research note. Inflation in the U.S. remains higher than interest rates and continuing negative real interest rates could lead to an "inflationary spiral," he said. That "will likely lead to sharply increased investment demand for gold to hedge against burgeoning stagflation," O'Byrne said.

EUR/USD Technical Analysis

In eur/$, the bigger picture view remains unchanged as trade from the April high at 1.6015 is seen as a large correction, with eventual new highs above 1.0615 after. Strategically, been suggesting to fade the extremes of the shorter term range and aggressively trail stops, which has worked quite well (see daily chart below) over the last few months. However, the market may finally be ready to resolve this multi-month range, so it appears to be time to switch from that strategy (of fading extremes) to one of buying (and holding) for a resumption of the longer term uptrend. The market is still forming a large pennant/triangle since Apr, generally seen as a “continuation” pattern. These patterns break down into 5 legs, with the last few days of weakness potentially being that final leg, and suggesting that a sharp, upside resolution may be ahead (see “ideal” scenario in red on daily chart below). Short from the Jun 6th sell at 1.5745 and for now, would take profits here (currently at 1.5400 for a 345 tick profit). Note that there is some risk for a downside break (not currently favored, but would target 1.5150/75 as part of this larger correction), so would wait to be sure that the market closes above the base today (currently at 1.5370/85) before reversing to the long side (may have to buy at a slightly higher price but the risk would be significantly lower). Would then use a close below as a stop.
Longer term, the long held bullish bias remains in place at the market is chopping within the final upleg in the rally from the June 2007 low at 1.3265 (wave V, see numbering on weekly chart/2nd chart below). However, this final upleg (which began at the Dec low at 1.4315) is not yet “complete” with gains above the April high at 1.6015 still needed (see shorter term). For now, maintain the long held, longer term bullish bias but will start to look for signs of a more important top (for a minimum 3-6 months and likely longer) on gains above 1.6015.

GOLD REPORT

A report from Standard Bank said that the market is expected to remain confined to a broad near-term trading range between $845/oz and $954.5/oz.
"A neutral view is expressed within the described parameters, but our primary view is for the short-term bear trend - from $1,030.8/oz - to establish a support base around $845/oz," added the Standard Bank Report.
The report advises traders to enter into long positions towards the lower end of the range.
"A secondary support band exists between $860/oz and $858.5/oz, while the $905/oz to $908.7/oz area is highlighted as an important interim resistance zone - gold strength above this area will initiate a move towards $935," said the report.
The report forecasts gold to strengthen beyond the levels of $954.50/oz, indicating the recommencement of the primary bull trend. With such a development yielding, an eventual move beyond $1,030.80/oz is expected, with a target of at least $1,055/oz.
"The market would be expected to advance into the $1,080/oz to $1,120 area/oz," added the report.
A sell signal would be triggered through $837/oz, exposing the yellow metal to $785/oz to $765/oz support zone, but the weaker bias may falter at the 52-week moving average, the report concluded.

BUY GOLD $890 TARGET $1250

Timeframe: 1 day chart
Direction: Long
Price: $890
Target: $1250
Stop: below $840
comment: Gold likely to hit $1250 in 2008. Gold is benefiting from inflationary pressure and weakening dollar and ongoing geopolitical tensions, buoyant oil prices and credit crisis in the mortgage sector of US.

$1250/oz target for 2008

"We may find a bit of stickiness around here. But the big round figures are just numbers and sentiment is still very positive towards gold," Ross Norman, a director at TheBullionDesk.com, said.Gold may now need a period of consolidation, but it will soon resume its bull-run towards lifetime highs -- TheBullionDesk forecasts gold to reach a peak at $1,250 an ounce in 2008.Prices have already climbed by 20 percent since the start of the year, but it is still a long way from its real-term peaks. After adjusting for inflation, spot gold exceeded $2,300 an ounce ($850 in nominal terms) in January 1980, according to Lehman Brothers.According to the World Gold Council, the real-term three-year average for gold stands at $1,200 an ounce.The previous spike in 1980 was the direct result of high inflation due to strong oil prices and geopolitical tensions -- the Soviet invasion of Afghanistan and the impact of the Iranian revolution.