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Spot Gold Prices – 3rd March 2009

Spot Gold Prices - Daily Candle Chart 3rd March 2009

As I suggested yesterday we had a contradiction in the charts, with the weekly chart suggesting a bearish move following the engulfing candle of last week, and the daily chart suggesting a possible turn in the short term. Following yesterday’s price action we can see that the weekly candle is holding the upper hand at the moment, with a move lower yesterday with a wide spread down bar. It is interesting to note that despite this, the opening price of the day was in fact gapped up in early trading, but the attempt to move higher was snuffed out later in the day with the high of the day, failing to penetrate the 14 day moving average. All of this was against a backdrop of a sharp sell off in equities as market participants took profits in the gold to cover losses and meet margin calls in other areas. Recently one important influence pushing gold prices higher was demand via exchange traded funds but with ETF inflows stalling and news from India that the imports of gold during February were virtually zero, opened the way for profit taking. A stronger US currency also pressured the metal but safe haven buying still remains the dominant factor for spot gold prices moving forward. With prices now approaching the support level at $925, we could see a reaction today, making intra day trading extremely difficult. My suggestion for today would be to wait and see – a break lower could indicate a move back to to $900 region and below, whilst a bounce off the support level could indicate a move higher. For any longer term trades I would suggest waiting for the bearish signal of last week to be confirmed, before opening new positions.

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

Support:    $921.50 (yesterday’s low)                                   Resistance: $978.45 (high of 25/02/09)

Support:    $910.00 (low of 11/02/09)                                   Resistance: $962.85 (high of 27/02/09

Support:    $903.30 (40 day moving average)                             Resistance: $958.15 (yesterday’s high)