Spot Gold Prices - Current Gold Chart 15th June 2009

Last week’s price action in spot gold prices reflected the indecision across all markets as investors begin to realise that the road to recovery is likely to be much longer and slower than originally anticipated.  In addition the fear that inflation will return as a result of the all the extra money that has been pumped into economies is driving gold sales, either directly in the form of coins and gold bars or indirectly into various investment vehicles such as exchange traded funds.   Indeed according to the World Gold Council, retail investors around the world bought 131 tonnes of gold in the first three months of this year, an increase of 33%.   From a technical perspective Friday’s price action finally gave us a meaningful signal, following the 4 days of sideways movement characterized by doji candles, and ended the day with a wide spread down bar closing the session $18.75 lower at $938 per ounce.   This bearish candle has finally confirmed the two bearish engulfing signals we saw in the prior week’s trading confirming that this reversal is now significant, and indeed this picture is re-inforced by the crossing of the 9 and 14 day moving averages.  Friday’s price high also failed to penetrate the 9 day moving average which is now adding further pressure to the downward move which has continued in early trading this morning.  There are several key points that we now need to consider carefully over the next few days, the first of which will be whether the 40 day moving average provides any degree of support, and also whether gold prices find any technical support levels in the $930 per ounce price region and any failure to hold here could see a deeper move to $920 or below.  The broader question, of course, is whether we have now seen another failed attempt to break the $1000 per ounce price point and how quickly we may see another attempt at this level.

The short term is bearish, medium term is sideways, long term is bullish.

Support:    $935.95 (Friday’s low)                                      Resistance: $980.17 (high of 29/05/09)

Support:    $924.75 (low of 20/05/09)                                  Resistance: $961.87 (high of 11/06/09)

Support:    $919.95 (low of 14/05/09)                                   Resistance: $958.20 (Friday’s high)