Gold Spot Price Chart - Daily Gold Prices 5th May 2009

Spot gold prices ended the day sharply higher, gaining $16 and closing at $902.73 per ounce, on a day characterized by thin volumes due to holidays both in London and Tokyo.  Gold prices were also given a boost by a weaker dollar, inflation concerns and technical buying once the spot gold price had breached the $900 per ounce price point.  From a technical perspective last Friday’s doji candle duly delivered an up bar yesterday which closed above both the 9 and 14 day moving averages but failed to hold above the 40, and as outlined in yesterday’s commentary these indicators are carrying less weight at the moment due to their close convergence.  In these circumstances we need to consider the broader markets which may influence spot gold prices in the short to medium term and trading this week may be extremely tricky given the raft of economic data, bank stress tests, closure of the Japanese markets for an extended holiday, and the continued consolidation and range bound trading that we have seen for the two months.   Given that this trading pattern in spot gold is likely to continue for some time my suggestion for trading gold in the next few days is to base this on swing trading on an intra day basis, as we are unlikely to see any longer term trends in the near future, and only when we see a break either above $935 or below $865, and in the meantime we need to trade within this range.

The short term trend is sideways while the medium and long term trends are bullish.

Support:    $884.05 (yesterday’s low)                                   Resistance: $922.77 (high of 04/03/09)
Support:    $871.50 (low of 16/04/09)                                   Resistance: $918.50 (high of 27/04/09)
Support:    $864.25 (low of 20/04/09)                                   Resistance: $907.30 (yesterday’s high)