Daily Gold Chart 29 July 2009

Without wishing to sound too pleased with myself, it is always nice to be proved right once in a while, and as I wrote in yesterday’s market commentary for spot gold we were right to be cautious in our trading, as the weakness suggested on the gold chart of the last few days finally arrived with a vengeance. Following  6 days of indecisive candles on the daily gold chart, the signals were not encouraging and yesterday the inherent weakness in the price of gold was duly confirmed with a wide spread down bar which breached the 9 day moving average, but found some support from the 14 and 40 day averages, which are tightly bunched. The resistance at the $955 price level finally proved too strong with this level remaining intact for the time being. For any move higher we will need to see this level breached, but for now we need to consider the likely depth of an move lower, and whether this is simply a short term reversal, or longer term trend.

Yesterday’s down bar has of course given us a bearish engulfing signal which would suggest a deeper move, but immediately below we have a strong level of support in the $930 to $935 price range. If this is broken then we could see a deeper move back to re-test support at the $925 region, and should this fail to hold, then a possible move lower back to $905 once again is possible in the medium term.

Short term is bearish, medium term is sideways, long term is bullish

Support 935.15   Resistance 947.89
Support 924.25   Resistance 934.78
Suport 904.65    Resistance 922.39