All my gold analysis is now on my personal blog : post of 3rd May pre-empted huge fall in spot gold prices. Next stop for gold price could be as low as $1400 to $1412 per ounce which is where 100 day moving average. On the weekly chart the spot gold price has not broken the 40 week average since early 2009 and this is sitting at $1366 – so anything is possible in the next few weeks.
Warren Buffett Shuns Gold as An Investment – the old rascal could just be right!
Since our last look at the spot gold price on 26th January when many so “experts” were predicting an imminent price collapse the metal appears to have regained its mojo and is trading at time of writing at $1402 per ounce and will soon be looking to re-test the $1420 resistance area in due course. You can find a more detailed technical analysis for both gold and silver on my annacoulling personal blog, where you will also find analysis for both the forex and equity markets. Happy trading!
Spot Gold 26 Jan 2011
Following last year’s impressive 30% rise spot gold has had its worst start in 14 years falling over 6% and tumbling to a low of $1322.62 per ounce in yesterday’s gold trading session. A number of technical and fundamental reasons have been posited for such a fall including investor appetite for risker assets such as equities and even Eurozone debt and a long overdue price correction.
From a technical perspective whilst yesterday’s small hammer candle hinted a short rally today, the breach of the 100 day moving average at $1355 per ounce was significant, and spot gold now has two critical areas to consider. The first of these is potential support in the $1314.53 region and any break below this level may then see gold move below the psychological $1300 per ounce price handle and thereafter the 200 day moving average at $1283.33. A test of the 200 day would be significant should the price reach that level and any break below would then signal a clear change of sentiment towards gold in the longer term.
On the weekly chart the key technical indicator is the 40 week moving average which is still providing good support and indeed has not been tested since July 2010 or breached since January 2009.
Gold Chart 18 Jan 2011
The spot gold price firmed up early today on the back of a weaker US dollar and inflation fears but has since softened with a mild return to strength for the US dollar taking the spot rate to $1367 per ounce at time of writing. As I have written in several posts on my personal financial blog, gold is having a difficult time recently regaining its upwards momentum and has basically been consolidating sideways since October last year. However, it is only recently that the spot gold price has broken below our three shorter term moving averages and the danger is that gold could now be looking to target the 200 day moving average which is sitting in the $1275 per ounce region.
The weekly chart exhibits a broadly similar picture with the exception that the gold price has managed to stay above both the 40 and 200 week averages. Indeed one of the most remarkable features of the recent bull rally in gold has been that on the weekly chart the price has not broken below the 40 week average since January 2009. This key average on the weekly chart currently sits at the $1300 per ounce price region and if we do see a further strengthening of the US dollar in the short term, be prepared to see the spot gold price move to test the first layer of support between $1325 and $1350 before possibly falling back to the $1300 per ounce price point.
My longer term forecast for gold still remains $1650 per ounce which I expect to see achieved later this year.
Gold is the only commodity to buy but it may be too late to join the party!
Gold Chart 29 Nov 2010
Spot gold prices continued to consolidate during much of last week with Friday’s gold trading session ending on a mildly negative tone as traders closed positions ahead of the weekend. However, despite ongoing worries this has failed to convert into a more positive tone for spot gold which is odd given the nervousness of the markets in general and as such we can only be guided by the technical picture. Friday’s close held above both the 9 and 40 day averages and marginally below the 14 day moving average, and this price action has continued in today’s gold trading session as the price moves between $1350 to the downside and $1375 to the upside. As we now begin to trade into the year end when thin markets will be the order of the day, expect to see further sideways consolidation punctuated with some erratic and volatile price moves as traders square away their end of year positions. Moving forward into 2011 the longer term picture for the precious metal remains firmly bullish and provided we see a break and hold above the $1380 price handle then this should provide a solid platform once again, which coupled with all four moving averages, will help to propel spot gold back above $1400 per ounce once again.
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(c) Financial Times Limited – 2010