Gold refuses to break down with Commodities (so far) by Bill Downey

Dow Drops 600 Points In 24 Hours As 30Y Yield Crashes To Record Low
Submitted by Tyler Durden on 01/14/2015

US equity prices and US Treasury yields are tumbling after the disappointingly narrative-destroying retail sales data for 'gas tax cut'-based December. The Dow is now down almost 600 points from yesterday's highs At 2.39%, 30Y Yields have never been lower...ever! US stock indices are down 3% year-to-date, testing the lows of the year. Crude is rolling back over, gold is surging, and the USDollar is fading...

US Retail Sales Drop Most Since June 2012 (And Don't Blame Gas Prices)
Submitted by Tyler Durden on 01/14/2015

But but but... US retail advanced sales dropped a stunning 0.9% MoM (massively missing expectations of a 0.1% drop). The last time we saw a bigger monthly drop was June 2012. Want to blame lower gas prices - think again... Retail Sales ex Autos and Gas also fell 0.3% (missing an exuberantly hopeful expectation of +0.5% MoM) and the all-important 'Control Group' saw sales fall 0.4% (missing expectations of a 0.4% surge). Boom goes the narrative.

Market Wrap: Copper Plummets; Euro Plunges To 9 Year Low On Euro-Court's OMT Ruling, Futures Down
Submitted by Tyler Durden on 01/14/2015

'After two days of sharp intraday and vicious reversals, the BTFD algos are suspiciously missing overnight, when as reported earlier, a bout of margin calls and stop loss selling meant not crude but copper would crash in today's episode of "guess the crashing commodity", on what Goldman dubbed a Chinese demand collapse which for those confused is different than an OPEC supply glut, and is also the reason why the entire commodity complex is trading at a decade plus low. As a result copper plunged to a five and a half year low, in the process halting the market due to the severity of the plunge. But the big event overnight was the farcical announcement by the European top court, which as everyone expected, rejected the German rejection of the OMT as illegal, stating it was not only legal (with certain conditions) but green lighting the way for the ECB's QE in one week, a move which sent the EURUSD crashing to a fresh 9 year low!

Italy's President Napolitano Resigns: What Happens Next

Submitted by Tyler Durden on 01/14/2015 -

Giorgio Napolitano, Italy’s longest-serving president, resigned before the end of a second 7-year presidential term. Napolitano accepted 2nd term in 2013 after parliament failed to elect his successor for days, had signaled from start he wouldn’t have served another full mandate. Here, courtesy of Bloomberg, is what happens next.

A "Conditional Bazooka": European Top Court Finds ECB's OMT "May Be Legal" But Must Meet Conditions
Submitted by Tyler Durden on 01/14/2015 -

Moments ago, the Advocate General Pedro Cruz Villalon of the EU Court of Justice in Luxembourg delivered the non-binding opinion on issue of Mario Draghi's "unconditional" OMT. Here are the details from Reuters and Bloomberg:

•EU COURT ADVISER SAYS OMT PROGRAMME IN LINE WITH EU LAW SO LONG AS CERTAIN CONDITIONS MET
•EU COURT ADVISER SAYS OMT LEGITIMATE SO LONG AS THERE IS NO DIRECT INVOLVEMENT IN FINANCIAL ASSISTANCE PROGRAMME THAT APPLIES TO STATE IN QUESTION
•EU COURT ADVISER SAYS ECB MUST OUTLINE REASONS FOR ADOPTING UNCONVENTIONAL MEASURES SUCH AS OMT PROGRAM

In other words, Draghi's "unconditional" bazooka just became conditional, but it is still a bazooka, albeit one that will never actually be used since well over two years after it was revealed following Draghi's famous "whatever it takes" speech, it still has no legal termsheet or basis, and no definition on its pari passu or burden-sharing status. And it never will: after all it was merely meant as a precautionary device designed to scare away the bond vigilantes, and never to be actually implemented.

Our thanks to www.zerohedge.com for the above articles.

Gold commentary

Commodities latest victim is Copper with a massive 8% drop in Asian trade. Either gold is going to join the downtrend next week into month end (which is favored) but it could be just a pullback to the beginning of February. With the Chinese New Year due on Feb 19th, another thrust higher from the beginning of February could develop IF THE SHORT TERM CYCLES play out.

Gold is certainly not rallying due to inflation, but most likely a safe-haven aspect at the moment.

Odds favor that we have a rally that began in November that has a 100-200 dollar potential into Mid February, and perhaps mid March. Those are odds and not absolutes, as markets have no absolutes.

From this perspective the 1255-1272 or the 1322-1352 area are the best targets for a seasonal high during the 1st quarter. In summary, while we are enjoying an interim rally, the downtrend in gold on a medium term basis has not been fully reversed by any means and as such, for now, we should treat this as a rally but by no means has the “low” been yet confirmed. The most important test now is to get a close above 1256 and 1272 on a Friday basis. That would add a lot of fuel to higher potentials above 1300.

Gold Chart

Gold remains at our 2nd weekly target of 1238-1244 and we now have a double top at the 1244 level. The only other place of significant resistance near here is the October high at 1255. If gold were to close above 1256-1262 the Elliot Wave Theory would favor higher prices. However, the key even here would really be if gold can close above 1272-1280 on a WEEKLY Friday close. That would then suggest 1322 (the 2013 crash low) that happened in April of that year. Now that 1229-1234 has been eliminated, odds favor that 1244-1254 is this week’s peak but if we close above 1256-1262 odds favor a spike to 1272. The short term trend remains up and it takes a close below 1217 to neutralize the short term uptrend. Support today is 1222-1226 and resistance 1238-1244 and then 1251-1256.

Cycles

The next turn date is Jan 19th (plus or minus 72 hours) and thus the window for a short term trend change opens on Friday and runs into the close of trading next Wednesday. Resistance on this daily chart is the 1255 area (give or take a few bucks) at the 200 day moving average and 1272 (give or take a few bucks) the next weekly reversal price point.

Silver

Silver got to the 1700-1730 resistance yesterday but the copper crash overnight brought us back to 1640 before we got this bounce. The chart below is from the 2014 high. Resitance is strong at 1275-1750 and 1780-1800. A close above 1803 would favor a move to the upper gold channel line. Support is the 1609-1640 area. Any close below 1630 would take the short term out of bull mode and put it in neutral. As far as a high, if we take out 1738 odds favr we move to the red resistance line where the high for January would favor taking place.

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