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Gold Analysis 6 June 2012

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Gold Chart 6 June 2012

Not a great day for gold bulls as the gold price ran into the strong area of resistance in the $1640 price region.  However, a great day for intraday gold traders who managed to capitalise on this failure to penetrate this area in the last hour of the floor session as the price tumbled from $1638 to a low of $1614.   All this was captured on our Hawkeye 816 tick chart which gave us both an aggressive volume based roadkill signal, followed almost immediately by a more conservative trend roadkill entry signal.  These entry signals were accompanied by a red trend in both time frames, a red heat map and, of course, selling volume in both timeframes.  With all our indicators lining up there was no reason not to take the trade to the short side.   The fall in the gold price has also coincided with a dramatic move higher in equity markets which today has seen the DOW rise almost 300 points as traders and investors appear to be sensing a further round of quantitative easing.

With the gold price now consolidating in a relatively tight range between $1625 and $1614 gold traders now need to wait to see whether last Friday’s surge higher for gold is likely to be sustained or was simply a knee jerk reaction to the recent slew of appalling economic news.