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Gold, coming off its best two-day performance in over a year, has traded between $1,458 and $1,480 so far today…as of 7:20 am Pacific, bullion is up $11 an ounce at $1,479..Silver is up 6 cents to $24.46…Copper is down 4 cents to $3.21…Crude Oil is 49 cents lower at $93.15 while the U.S. Dollar Index has declined one-quarter of a point to 82.53…

The $1,484 Fibonacci level. as John has pointed out on his charts, is the next key price area to watch after Gold broke above $1,453 yesterday…we view the sharp rebound since early last week as just that – a normal bounce out of oversold conditions and not the beginning of a major new push to the upside…at the very least, we ultimately expect to see a re-test of Gold’s recent low…holdings of the largest Gold-backed exchange-traded fund, the SPDR Gold Trust, dipped 0.25% to 1,090.27 tonnes yesterday from 1,092.98 on Wednesday…currently, holdings are at their lowest level since September, 2009…”Heavy disinvestment from ETF investors is being offset by strong physical demand in key markets such as India and China, but neither of these is likely to continue indefinitely, and which runs its course first could determine whether the (Gold) price moves $100/oz higher or lower”, Macquarie said in a note…there’s a 3-day holiday coming up in China next week (May Day break) which could slow down some of the physical buying from that country…

U.S. Q1 GDP Growth Disappoints

U.S. economic growth regained speed in the first quarter, but not as much as expected, which could heighten fears the already weakening economy could struggle to handle deep government spending cuts and higher taxes…gross domestic product expanded at 2.5 percent annual rate, the Commerce Department reported this morning, after growth nearly stalled at 0.4% in the fourth quarter…the increase, however, missed most economists’ expectations for a 3% growth pace…in addition, part of the acceleration in activity reflected farmers’ filling up silos after a drought last summer decimated crop output…removing inventories, the growth rate was a tepid 1.5%…on a positive note, consumer spending, which which accounts for more than two-thirds of U.S. economic activity, increased at a 3.2% pace – the fastest since the fourth quarter of 2010…it grew at a 1.8% rate in the fourth quarter of last year…the Federal Reserve meets next week and is widely expected to keep purchasing bonds at a pace of $85 billion a month…data ranging from employment to retail sales and manufacturing weakened substantially in March after robust gains in the first two months of the year…there are indications the weakness persisted into April…

Bank of Japan Upgrades Outlook

The Bank of Japan has sharply upgraded its outlook for the world’s third-largest economy and raised its forecast for inflation even as data showed the nation slipped deeper into deflation in March…today, as the BOJ released its semi-annual report on prices and economic activity, it said that its policy board members expect inflation to average 1.4% in the next fiscal year, rising to 1.9% the year after (the current fiscal year began this month)…the BOJ predicts the economy will start picking up by the middle of this year and lifted its forecast for real GDP growth to 2.9% from 2.3%…thereafter, prices would be pushed up by a combination of increasing demand, a weaker yen and rising expectations of inflation, the BOJ said…

Bundesbank Criticizes ECB’s Bond Buying

Reuters reported this morning that the head of the Bundesbank has sharply criticized the European Central Bank’s plan to buy the debt of highly indebted states in a confidential report, according to German newspaper Handelsblatt…in the 29-page report prepared for Germany’s Constitutional Court, the Bundesbank warns that the purchase of such debt could “compromise the independence of the central bank” and could be difficult to stop, the paper said in an article made available yesterday…Bundesbank chief Jens Weidmann was the only ECB Council member to oppose the plan from the outset, which he described as “tantamount to financing governments by printing banknotes”…the Constitutional Court, Germany’s highest tribunal, is due to consider OMT in June, Handelsblatt said…in its report for the court the Bundesbank noted that the OMT program could reduce the incentive for euro zone governments to reform…

China’s Leaders Concerned About Financial Risks, Face Tough Balancing Act

China must work to strengthen its economy while also guarding against financial risks, the country’s top leaders said in a special meeting convened amid rising concerns about the near-term growth outlook…the Financial Times reported this morning that the Politburo Standing Committee, the highest decision-making body in China, met to discuss economic policy after reporting two weeks ago that growth slid to 7.7% in the first quarter, an unexpected decline from its 7.9% pace in the final quarter of 2012..a survey of purchasing managers published by HSBC this week suggested that momentum has remained sluggish in April…the politburo pledged to bolster domestic consumption and to make it easier for companies to gain approval for investment projects…at the same time, it vowed to standardize the financing mechanism for local governments, addressing concerns about the mountain of debt they have accumulated through backdoor channels…Ding Shuang, an economist with Citi, made some insightful comments in the Financial Times article regarding the Politburo meeting and the dilemma facing Chinese policymakers at the moment…”It is difficult to achieve both objectives (bolstering the economy and guarding against financial risks)…from the context, I’m left with the impression that they may tolerate lower growth to emphasize more the quality of growth and reduce financial risk”…he noted that Xi Jinping and Li Keqiang, China’s new leaders, are only at the start of what is expected to be a 10-year term in office…“They have a long time horizon…the last thing they would like to do is to exhaust all their growth-support tools at the beginning of their tenure only to face problems later”, Shuang stated…

Today’s Equity Markets

Asian markets were mostly lower overnight with japan’s Nikkei average slipping 42 points to close at 13884…it was still Asia’s best performing Index of the week, however, gaining 4.3%…China’s Shanghai Composite fell 21 points to 2188 (2150 is a key support area that needs to be watched closely)…European shares have accelerated to the downside in late trading overseas after release of U.S. GDP…meanwhile, “growth” forecasts for Spain for this year have been revised down from -0.5%  to -1.3%…the Dow is unchanged through the first 50 minutes of trading, despite the lower-than-expected GDP number…U.S. consumer sentiment eased in April as Americans remained concerned about their employment and financial prospects, a survey released on Friday showed…the Thomson Reuters/University of Michigan’s final reading on the overall index on consumer sentiment fell to 76.4 from 78.6 in March, although it topped economists’ expectations for 73.2…the TSX is down 63 points to 12265 while the Venture is relatively flat at 963…Colorado Resources (CXO, TSX-V), yesterday’s big mover on the CDNX, is off a penny at 53 cents after trading as low as 46 cents and as high as 60 cents…hole NR-13-001 was impressive, returning 333 metres grading 0.51% Cu and 0.67 g/t Au…the property is approximately 190 km north of Stewart and 15 km northwest of Imperial Metals‘ (III, TSX) Red Chris Mine which is currently in an advanced development stage…

Below is a 3-year weekly TSX chart…recently, the TSX broke below trendline support that was part of an upsloping channel in place since the middle of last year…what has happened this week is that the Index has bounced up to that support line which is now resistance and is also accompanied by the declining 20-day moving average (SMA)…so the TSX has some work to do to drag itself out of what appears to be a downtrend…a high net worth portfolio manager we spoke with yesterday has his clients in an “unusually” high cash position (35%) and is expecting a 5 to 10% decline from current levels in the TSX…

Canadian Dollar Update

The loonie at the moment is stuck in a trading range between 97 and 99 cents…watch the loonie carefully – if it breaks in either direction, above resistance or below support, for another clue regarding the direction of the Canadian economy and the equity markets…below is a 3-year weekly chart…

Eagle Hill Exploration (EAG, TSX-V) Updated Chart

It’s difficult to get respect these days in the exploration business…Eagle Hill (EAG, TSX-V) released drill results yesterday from its Windfall Lake Property in northwestern Quebec, including 40 metres grading 6.18 g/t Au (58 to 98 metres depth)…assays from an additional 4100 metres of drilling that started in February are still pending…the stock climbed as high as 10.5 cents yesterday before closing up 2 cents at 9.5 cents on total volume (all exchanges) of nearly 2 million shares…it’s quiet this morning, off a penny at 8.5 cents…below is a 15-month weekly chart…notice the non-stop selling pressure (albeit now starting to decline) in this stock over the last 15 months…technical resistance is at 11 cents…

SilverCrest Mines Inc. (SVL, TSX-V) Updated Chart

SilverCrest Mines (SVL, TSX-V) has recovered after dipping as low as $1.79 last week…the support band beginning around $1.70 is indeed critical for SVL – that level has been tested several times since late 2011 – and any drop below that could precipitate a dangerous decline…SVL is up another nickel to $2.28 as of 7:20 am Pacific…below is a 2.5-year weekly chart from John…

Note: John, Jon and Terry do not hold share positions in EAG, SVL or CXO.