Gold Prices - Daily Chart 8th April 2009

Gold Prices - Daily Chart 8th April 2009

Gold prices finished higher yesterday gaining almost 10 dollars on the day, as some investors used recent pullbacks as a buying opportunity whilst others preferred to cover their short positions. As the equity markets declined for the second day in a row the need for a safe haven was another positive influence for spot gold prices, with the daily candle closing neatly with no wicks either to the top or the bottom. However, as we can see from the daily candle chart, yesterday provided an  ‘Inside Day’ pattern in gold, in which the high and the low were within Monday’s trading range, which suggests a period of consolidation, and we will now have to wait and see if the downtrend continues or the rebound takes over after recent sell offs. For any sustained rally we will need to see three things – first, a break back through the heavy resistance now above the current prices, second a move back above the moving averages which are currently all pointing lower, and finally a strong bullish signal, none of which we have at present. My suggestion for today is to therefore to stay out of the market until early next week as with thin trading volumes ahead of the long weekend, many traders will be closing positions off early, making trading very difficult and prices more volatile than usual. This situation is not helped by little fundamental news on the economic calendar. Intra day trading is possible, but again risky under these conditions, so my advice is to take an early holiday and a break from trading in spot gold for the rest of the week!
The short term trend is bearish while the medium and long term trends are bullish.

Support:    $871.05 (yesterday’s low)                                   Resistance: $909.85 (high of 03/04/09)

Support:    $851.90 (low of 23/01/09)                                   Resistance: $896.97 (high of 06/04/09)

Support:    $843.25 (low of 22/01/09)                                   Resistance: $885.10 (yesterday’s high)