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Gold At Record Highs Sky Is The Limit

22 Aug 2011 Todays resistance US$ Todays support US$ Todays pivot point US$ 1st resistance 1878 1st support 1821 1850 2nd resistance 1906 2nd support 1793 3rd resistance 1934 3rd support 1765

Daily Gold and Silver Expected Range: Gold: US$1820 - $1900 Silver: US$41.80 - $45.30 The Days Story: Spot Gold rose to another record high on Friday although it finished its day near mid intraday range due to some profit taking towards the end of the session as stock indexes found some footing. Gold's gains came mainly due to safe haven demand after string of disappointing economic reports in recent weeks from U.S forced investors to seek refuge in less riskier assets. Stock markets around the globe continued their dismal run and recorded worse 4 weeks of losses since 2007. Worries over European debt crisis were also there to support bullion prices. Meanwhile, weaker greenback and steady to higher crude oil prices were other bullish factors for gold price. Last week, bullion finished with over 6% gains making it best weekly gain since in 3 years. This was golds
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seventh straight week of gains, its longest winning streak since April 2007. Gold rose to 16th record high yesterday after it broke past its previous all time high of $1576 on July 13. Gold gained 9% in July and is up 37% this year, its 10th straight year of gains. Coming Up: Looking ahead, we have German ZEW survey and Eurozone's consumer confidence figures to watch for during European trading hours. Later, some housing data from U.S will be scrutinized by market players. The situation in Europe is likely to have a greater impact on market direction again this week. After a slew of disappointing U.S. data this week, focus will be very much on whether incoming Eurozone data will paint a similarly dismal picture, said BNP Paribas. Keep an eye at U.S dollar and crude oil prices as usual for further indication. Eurozone debt crisis and aftermath of U.S rating downgrade are likely to keep gold's safe haven bid alive in coming days but a rebound in equity markets will call for further losses in precious metal. Whats Happening on Charts? On daily charts, Price is trading above 20, 50 and 100 DMAs and as long as price stays above those levels upside momentum stays in place although eventually price will be gravitated towards them. Bollinger bands are still wide open with upper band sitting at 1900 signaling more gains. RSI (14) crossed back above 70 level after falling below that level briefly late last week. RSI has failed to make new highs despite price rose to new highs in last two sessions, which is a strong signal for major reversal although such a signal was negated in recent past. MACD, however is well established in bullish zone but due to its lagging nature we focus more at RSI and Stochastics along with candlestick patterns and other chart indicators and take cue from MACD for trend confirmation. Slow Stochastics (8,3,5), which have been quite accurate lately in pointing towards price reversals, are painting the same picture as RSI, back above in overbought territory and unable to make new high. Stochastics is more responsive indicator compared to RSI and MACD but at the same time it does give lot more false signals so we need to combine all chart studies and trade accordingly. The most difficult task for any analysts at this time is to precisely predict a correction in gold price. Everybody agrees on a correction due to overbought conditions but favorable fundamentals keep outweighing technicals. Once the recent economic turmoil comes to a halt, we will see gold price to shave off some of its recent gains. Some market analysts believe recent parabolic run has already turned gold into a bubble while other believe gold will see $2000 before a pullback. I personally believe if data keeps disappointing the market and Eurozone debt crisis stay on front burner, it wont surprise me if gold lands in 2K zone sooner than later although small dips are expected on the way to that milestone but it will be a buying opportunity for bargain hunters. However, if stock markets calm and heightened risk for double dip recession abates, we will see strong technical selling for a much deeper correction perhaps to 1600 levels.

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Overall, candles and technical indicators show bulls in total control on technical grounds. We can look for $1850, 1837-40 & 1823 for immediate support levels. A successful break below that level may send price to 1800. Todays resistance levels will be $1875-78 & 1900. Please do combine you technical studies with fundamentals for better results so please keep an eye on things from U.S., Eurozone along with dollar and oil price movement for further indication. Key economic reports from Asia, Europe and U.S also impact prices and need to be closely watched. Dollar Index: U.S dollar index a gauge, which measures dollar against basket of six major currencies erased most of its previous days gains and finished its week in red as slew of disappointing economic reports fueled anticipations of another round of quantitative easing also known as QE3 as such a measure would further devalue the dollar. Dollar fell against its main rival Euro on Friday making its weekly loss against common currency to 1% while it fell 0.3% against Japanese Yen for the week as greenback is trading just above its historical low against Yen. Reserve currency however, scored marginal gains against its British counterpart. Going forward, dollar will seek safe haven support from escalation in European debt crisis although greenback is likely to face headwinds due to interest rate differentials and further talks about double dip recession and QE3 in days ahead. Gold and Dollar Correlation: Gold and Dollars inverse correlation turned positive after another week of turbulent ride. Despite improved negative correlation relationship between two assets in recent past, bullion's link with the dollar could be shaky over the longer term. Dollar denominated assets tend to move higher at dollar weakness as it makes them cheaper for holders of other currencies. But gold and dollar can break away from that norm at times of heightened economic and geopolitical uncertainty. Emerging Chart Pattern: Pattern: Triangle Trend: Down Period: 15 Min Length: (Periods): 152 Pattern Ends: 0245 GMT (22/08/2011) Strength: Average

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Major World Indexes: Indexes DOW Jones S&P 500 NASDAQ FTSE 100 DAX 30 CAC 40 *NIKKEI 225 *CSI 300 *HANG SENG * Todays Data 2011 Price History: Month Open Price January 1417 February 1341 March 1410 April 1431 May 1562 June 1539 July 1486 *August 1626 * Current Month

Close 10817.70 1123.53 2341.84 5040.76 5480.0 3016.99 8724.32 2819.18 19589.90

% Change 1.57 1.50 1.62 1.01 2.80 1.92 0.06 0.41 0.98

Close Price 1341 1410 1432 1563 1539 1499 1626 1849

Change ($) 68 69 22 132 23 40 140 223

High 1424 1435 1447 1569 1576 1558 1632 1878

Low 1307 1324 1380 1412 1462 1490 1478 1607

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Important Economic Data: DATE Event 22/08/2011 German ZEW Survey (Economic Sentiment) (AUG) 22/08/2011 Euro-Zone ZEW Survey (Economic Sentiment) (AUG) 22/08/2011 German ZEW Survey (Current Situation) (AUG) 22/08/2011 Euro-Zone Consumer Confidence (AUG A) 22/08/2011 New Home Sales (JUL) 22/08/2011 New Home Sales (MoM) (JUL)

Country EU EU EU EU USA USA

Forecast -26.0

Previous -15.1 -7.0

85.0 -12.4 315K 1.0

90.6 -11.2 312K -1.0

Other Metals: Silver futures for September delivery closed up 174 cents at $42.43 an ounce on Friday. Platinum futures for October delivery closed up $27.20 to $1,874.90 an ounce on NYMEX. Palladium futures for September delivery closed down $8.20 to 748.80 an ounce on NYMEX. N.Y. Copper for September delivery closed up 2 cents at $3.98 a pound on Friday. Gold (News and Views): December Comex gold closed up $30.20 at $1,852.20 an ounce on Friday. The London P.M. gold fixing was $1848.00 on Friday compared to its previous P.M fixing $1,824.00. The dollar index, which measures the U.S. currency against a basket of six major currencies, fell 0.25 to 73.97 on Friday. Crude Oil for September delivery finished down 0.12 at $82.70 on Friday on New York Mercantile Exchange. Gold hit its true peak on Jan. 21, 1980, when it rose to $825.50 an ounce. Adjusted for inflation in 1980 dollars, that translates to an all-time record of estimated $2,500 an ounce, in 2011 dollars. The gold-to-silver ratio fell to 43.20 from 45.00 a day earlier. In the Kitco News Gold Survey, out of 34 participants, 21 responded this week. Of those 21 participants, 19 see prices up, while two see prices down, and none see prices sideways or unchanged. Market participants include bullion dealers, investment banks, futures traders and technical chart analysts. Factors Affecting Gold Price Yesterday (Experts Views): "Gold is gaining both increasing attention and ironically, growing skepticism that its current move can be sustained. That is very bullish. Emotion is driving the thinking of the skeptics, rather than the important fact that gold remains undervalued," said James Turk, founder of GoldMoney. Golds major strength in the last 5,000 years has been its stability, its ability to store wealth in times of hardship and to protect your saving from becoming worthless. At this point, in time we can see that gold is

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reacting to a perfect storm of factors in the shape of high demand from China and India, a weakening U.S. Dollar, mine supply decreasing year on year, sovereign debt crisis in Europe and an increase in worry in the market as a whole, Austin Kiddle, analyst at London-based firm Sharps Pixley, said. Lack of confidence in the global economy is pushing people towards gold, Tom Pawlicki, a Chicagobased analyst at MF Global Holdings Ltd., said in a telephone interview. Gold will continue to advance unless leaders are able to resolve the European or U.S. debt crisis. Gold is the currency of the world at the moment, with the world convinced that the monetary and fiscal authorities are likely to do nothing right and everything wrong when it comes to resolving the worlds current fiscal problems, Dennis Gartman, the economist who correctly forecast 2008s commodities slump, said in his daily Gartman Letter today. Gold Future Outlook: We could hit $2,000 as early as next week sometime at this rate, certainly in the next weeks, said Matt Zeman, head trader and strategist at Kingsview Financial in Chicago. Golds fast rise has been of some concern, he added. It could end with a selloff that would shave $200 to $100 off current prices, although underlying fundamentals for the metal are favorable, Zeman said. Charles Nedoss, senior market strategist with Olympus Futures, said despite the furious rally in gold, he believes there is enough momentum and uncertainty in the global markets to continue to support prices. Technical chart resistance, he said, is at the round number of $1,900, which is not far from where gold tagged an all-time nominal high. Support comes in at $1,800 and then $1,774, but he added that gold prices could fall as far as $1,704, which is the 20-day moving average, without breaking the recent trend. Record gold prices may be heading for a correction of about 8 percent next month, but the safe-haven metal may also rally to $2,400 an ounce next year as investors seek refuge amid global economic turmoil, a global head at INTL FCStone said on Saturday. "Trees don't grow till heaven. I think buyers need to be beware. we are in a 'caveat emptor' market," said Jeffrey Rhodes, global head of precious metals at the brokerage and an industry expert, told reporters at a conference on gold in the southern Indian state of Kerala. Rhodes said gold may retrace to $1,725 by next month, and then race ahead. "My problem is that people are buying gold and they don't understand why they are buying gold and that's a big problem and that is a classic symptom of a bubble," said Rhodes. Austin Kiddle, analyst at London-based firm Sharps Pixley, said with the economic woes seeming to carry on for the foreseeable future, the outlook for gold as a safe haven is strong. But he said there is some concern about a potential gold market bubble, which would be dangerous territory for a safe haven. For now theres enough interest in gold to keep prices support, but Kiddle said, unless there is a new major

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crisis popping up anytime soon, we feel that gold is currently over-brought and should see a small correction. However, as with most perfect storms there is always an air of uncertainty that underlies most systems, and a single factor such as more countries following Venezuela's lead or yet more debt downgrades, could easily push gold closer to US$2,000 this year. Data Source: Reuters, Marketwatch.com, thestreet.com, Kitco, Bloomberg, autochartist.com, dailyfx.com Prepared By: Bilal Afzal Market Analyst Goldtrades.info (HK) Ltd Cell: (852) 9017 6786 Email: bilalafzal@sbihk.com www.goldtrades.info

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