Gold should be setting up the summer low during July 25 to July 30th by Bill Downey

INTRA-DAY NEWSLETTER ~ July 25 2014

Oil Spikes, Stocks Dump As Van Rompuy Gives Green Light To Extend Russian Sanctions To Oil
Submitted by Tyler Durden on 07/25/2014 - 11:27

Curious why Brent just spiked by over 1% (and the S&P500 took a leg lower)? The reason is headlines from Reuters citing Europe's unellected dictator, Van Rompuy who has said that sanctions should include Oil technology. However, in a hilarious twist, the unellected muppet of Europe's insolvent banks, hopes to get his sanctions cake and snort Russia's gas too, adding that Europe's sanctions should exclude the gas sector.

• LETTER FROM EU COUNCIL HEAD VAN ROMPUY TO MEMBER STATES SAYS RESTRICTIONS ON SUPPLYING TECHNOLOGY TO RUSSIA SHOULD INCLUDE OIL, BUT EXCLUDE GAS SECTOR-EU SOURCES

Here it appears that Europe's unelected leaders are somehow deluding themselves that if faced with escalating sanctions, Russia will not unilaterally cut off the gas to Europe.

Q2 Closes With A Durable Goods Whimper And 1.6% Y/Y Drop; Core Capex Orders Revised Much Lower; Shipments Tumble

After tumbling in May by 1.0% which was the biggest drop since the dreaded "polar vortex", Durable goods in June posted a modest pick up in June rising 0.7%, driven by yet another surge in aircraft and parts which rose by 8.2% for Nondefense aircraft and 15.3% for defense (thank you Russia). And while this beat expectations of a 0.5% increase, it was the first Y/Y drop in Durable goods since February (and since 2013 if one uses unrevised data).

There was some modest good news in the core capex orders, aka the Capital Goods Shipments non-defense ex air, which rose 1.4%, beating expectations of 0.5%, however, this was at the expense of a major downward revision to the May number which initially had risen 0.7% and now is said to have declined 1.2%, i.e. a more than complete wash.

Finally, the piece de resistance confirming the Q2 GDP recovery is once again indefinitely delayed, were core capex shipments, which tumbled -1.0% on expectations of a 0.4% boost, and May revised lower from 0.4% to 0.1%. Stick a fork in actual CapEx.

Europe Unveils Preliminary Sanctions Against Russia
Submitted by Tyler Durden on 07/25/2014 - 08:27

According to Reuters, key measures suggested by the Commission include:
• closing EU capital markets to state-owned Russian banks,
• an embargo on arms sales to Moscow,
• restrictions on the supply of energy and dual-use technologies.
• a list of 15 individuals and 18 entities, including companies, subject to asset freezes for their role in supporting Russia's annexation of Crimea and detribalization of eastern Ukraine.

Of course, since France would blow a gasket if its Mistral ship was impacted by the sanctions, and since this really is just another populist measure not intended to really punish Russia (as that would mean a prompt shut off of European gas and an even prompter slide into a triple dip recession if not outright depression), Europe promptly "detoothed" the sanctions by announcing that they would not affect current supplies of oil, gas and other commodities from Russia, diplomats said.

Gold Chart
So far gold has pulled back to the 1287 area. The latest chart looks like this below as we go into Friday afternoon. The two main support points look like 1277-1287 and 1255-1265 for today. Note there is closing support at 1272 as well. It appears that the option boyz are keeping gold close to 1300 for optimum expiration for the option writers. Expiration occurs on Monday the 28th, so at any time now gold could begin its move as most of the options are probably covered now. We are favoring a low to develop and a move higher into Mid-August. Resistance is 1302-1307 and 1312-1316 for the remainder of the day.

There is one other thing. August futures rollover to December must be complete by next Thursday. It is possible that this too could affect price. We have seen many rollovers where the front month is liquidated and then the buyers wait to roll into December hoping to get a better price. Thus the question remains as to whether we’re making the low today or whether it extends a few days into next week. BUT WE ARE IN THE TIME WINDOW NOW. The time window for a low is July 25th – July 30th is here. We expect a low in this timeframe with a short term rally to mid-August and then we’ll see.

In summary, if gold can push through 1302-1306 then it is possible we have made the low. If gold gets back below 1290, we favor one final push early next week to establish a low and then a rally into mid-August will be favored.

CYCLES
The cycle window is open ----odds favor a summer low here between July 25th – July 30th. The ideal day would be Monday or today for the low.

Silver
Silver is at a support point and has the same status as gold. We favor a low in this time frame.
Resistance is 2116-2133 and support 20.25-20.45

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