Gold and silver support and resistance charts for Wednesday by Bill Downey

Headline news first from www.zerohedge.com and gold and silver analysis & charts follow.

US Trade Deficit Drops To $39 Billion, Lowest Since December 2013 As Imports, Exports Decline
Submitted by Tyler Durden on 01/07/2015

Those waiting to see if the crude crash would lead to any sizable adverse impact on the US trade deficit in November, as lower production led to higher imports if only on paper, the answer is yes, but in the opposite direction: instead of increasing or dropping just marginally from October's $43.4 billion (to the $42 billion consensus estimate), the November trade deficit tumbled by 7.7% to $39 billion the lowest print since December 2013, as a result of a 2.2% drop in imports coupled with a 1% decline in exports. But it was shale crude once again that was the swing factor, which was massively produced as domestic producers scramble to offset declining prices with extra volume, because as the data showed, in November the US imported the smallest crude amount by notional since 1994, and the lowest cost crude since 2010.

ADP Employment Beats 4th Month In A Row, At 6-Month Highs
Submitted by Tyler Durden on 01/07/2015

For the 4th month in a row (thanks to revisions revisions revisions), ADP Employment beat expectations. At 241k in December (above the 225k exp.) this is the highest print since June's peak (and occurs as both manufacturing and services PMIs showed faltering unemployment sub-indices). Small business appeared to add the most positions (less than 49 employees) as large businesses added the least with Services-producing firms dominant (even as Services PMI has plunged for 6 straight months). Will "good" news be bad news?

Greek Bond Yields Surge Over 10% As Germany Flip-Flops On Grexit Fears (Again)
Submitted by Tyler Durden on 01/07/2015

Greek 10Y bond prices (and stocks) are tumbling, pushing the yield well north of 10% once again - the highest in 15 months - as Bild reports Germany warning of bank runs and systemic financial system collapse. Having noticed the weakness in financial assets that this caused, several European talking heads are out now trying to calm the waters with Germany's Michael Fuchs confirming "systemically [Greece] is not relevant anymore," but as one trader noted, for now, "investors seem wary of catching the falling knife."

First Euro area Deflation Since Lehman Sends Futures Higher; Brent Tumbles Below $50 Then Rebounds
Submitted by Tyler Durden on 01/07/2015

Things in risk land started off badly this morning, with the worst start to a year ever was set to worsen when European equities came under early selling pressure following news of German unemployment falling to record low, offset by a record high Italian jobless rate, with declining oil prices still the predominant theme as Brent crude briefly touched its lowest level since May 2009, this consequently saw the German 10yr yield print a fresh record low in a continuation of the move seen yesterday. However, after breaking USD 50.00 Brent prices have seen an aggressive bounce which has seen European equities move into positive territory with the energy names helping lift the sector which is now outperforming its peers. As a result fixed income futures have pared a large majority of the move higher at the EU open. But the punchline came several hours ago courtesy of Eurostat, when it was revealed that December was the first deflationary month for the Eurozone since the depths of the financial crisis more than five years ago, when prices dropped by -0.2% below the -0.1% expectation, and sharply lower than the 0.3% increase in November, driven by a collapse in Energy prices.

Gold Chart

We discussed yesterday if we exceeded 1213 that 1222-1225 was the next target resistance and we came in at 1223 yesterday. Resistance target for this week is 1222-1232 and/or 1255-1272 as a monthly high potential. Those are the two most important price points in January. Support for Wednesday is the 1195-1201 area and the 1204-1207 area, but that is only minor support. Weekly support is the 1177-1182 area and 1155-1163 monthly. Also as discussed in last night’s website update, odds favor either Tuesday or Wednesday as a high point (1222-1232) and odds favor gold pulling back or moving sideways into the Friday NFP (non farm payroll) report. From there the control boyz will clear stops that are close to market prices, and from there the short term trend into Jan 19th (plus or minus 72 hours) should take place. Odds favor we stay range bound today in the 1201-1220 area. The short term trend is up, but a close below 1192 would put it in neutral mode.

Cycles

The short term cycle due Jan 5th (plus or minus 72 hours) gave us an 1167 low on the first day of the window (last Friday) and thus we have been favoring higher prices into the next cycle turn due Jan 19th (plus or minus 72 hours). However, the cycle window doesn’t close until the end of today and yesterday’s high at 1223 leaves the potential OPEN that the blue cycle is making a high point here from which it will turn down and move lower into the next cycle. It’s not often we get both a high and low during a cycle window, but when markets are this choppy and overlapping and when ranges are tight and sideways (suggesting a lot of uncertainty) we get into this scenario. Here too the chart says high for this week 1222-1232 most favored as the lines of resistance are right there. On a monthly basis here we also see 1255-1272 as the other target IF GOLD CAN CLOSE ABOVE 1238. The bottom line is we may have made a high here. One would think that commodities and even oil are due for a bounce. If that develops gold should move higher into the 19th. If not, odds favor that gold peaked yesterday/today and the NFP report will drive prices lower into the end of next week. It’s probably going to come down to the NFP report (barring some headline event) this week.

Silver

The choppy and overlapping price pattern in silver (and gold also) warn us that for the moment, this is a counter trend move and that it’s possible that Silver is peaking and ready to head down once again under 16 at the lower trend lines on the chart. The bottom line really is whether silver can get above the resistance lines on the chart in the 1675-1690 area. If we can, then silver only has 1725-1750 as resistance before the 18.50 level. Support has been solid at 15.50 but any break below that favors the lower dual red line under 15. Support today is 1604-1612 and 1550-1575 on a weekly basis.

The bottom line for both metals is silver must get above that resistance line 1675-1690 and gold needs to make 1222 a support and not resistance point, and achieve a close above 1234 in order for the metals to favor higher prices next week. The short term trend is up in silver but a close below 16 will neutralize the trend.

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