Spot Gold Prices - Daily Candle Chart 25th March 2009

Spot gold prices closed sharply lower yesterday, with the daily candle closing just below the 9 day and 14 day moving averages and just above the 40 day MA, but with a long lower wick, suggesting that this may only be a temporary reversal. The move lower was seen as a follow through response to recent rallies in the stock markets with traders booking profits and exiting long positions.The key from a technical perspective on the gold chart will be to see whether the support level now in place at the $920 region will hold, and if not we could see a re-test once again of the support area just below at $910. My own view is that the doji candle of last week is still holding sway at the moment, and the rally in equities will be relatively short lived as the economic situation worsens further, with the bullish momentum returning in due course. IN the meantime we must be patient, and wait for signals in the daily and weekly charts for our longer term trading.

In the past few weeks everyone has been talking about “quantitative easing” but if and how effective this will be in the longer term is anyone’s guess. Given the tensions between the UK Prime Minister, the Bank of England, and the rest of Europe, a cohesive approach seems extremely unlikely with few governments able to agree on the correct way to move ahead. All of this is uncharted territory and this uncertainty remains good news for gold prices in the medium to longer term.

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

Support: $916.65 (yesterday’s low) Resistance: $967.00 (high of 20/03/09)

Support: $911.65 (low of 17/03/09) Resistance: $957.50 (high of 23/03/09)

Support: $906.55 (low of 12/03/09) Resistance: $944.20 (yesterday’s high)