Spot Gold Chart 27 July 2009

Friday’s candle for spot gold prices ended the trading session ahead of the weekend, with yet another doji, making this four in a row, and setting up an interesting start to the week. With such indecision on the daily gold price chart, we would be wise to be cautious in our trading in the next few days, as this could be the signal to a move lower in the short term, with all four candles having failed to break and hold above the $955 per ounce level. The resistance at this level created in late May and early June, seems to be proving to be a substantial barrier to any move higher, and should this remain intact, then we could see a re-test lower this week, back towards the $935 to $940 region initially. Whilst the 9 day moving average is providing strong support having crossed above the 40 day moving average, this could easily be reversed in any move lower, and is far from established, so we need to be careful in trading any short term move higher this week, unless the pause point of last week is ignored, and we see a break and hold above the $960 per ounce level.   Reasons that this is simply a pause point in a move higher for spot gold is simply the continuing disintegration of the US Dollar as evidenced on the Dollar Index chart, which too is at a critical point.   In addition the weekly gold chart appears broadly supportive that bullish momentum in gold prices has been established once again.

Support   940.11            Resistance   955.53
Support   931.20            Resistance   939.83
Support   921.36            Resistance   930.14