Gold Prices - Daily Candle Chart 5th March 2009

Gold Prices - Daily Candle Chart 5th March 2009

Spot gold prices declined for the 8th straight day in a row, briefly dipping below the 40 day moving average and even breaking the $900/oz level, finishing the day with a doji candle just above the 40 day moving average. In the last few sessions the perception was gold went down as investors were forced to cover margin calls following record lows in equities, but the news of stimulus packages particularly in the US and China managed to calm some of the anxiety in the markets which helped gold prices to stabilise in later trading, as it returned to it’s more traditional role as a safe haven during turbulent times. Some traders agree that stocks and oil could be back in favour soon, but with governments possibly increasing money supply and potential for further financial bailouts still looms the picture is extremely confused. The first bank to start printing money is likely to be in the UK, where a further cut in interest rates combined with quantitative easing is seen as the only option left to slow the deflationary pressures, and introduce some inflation back into the markets to prevent further declines in both prices and demand.

As we have seen, the daily candle from yesterday ended in a doji, and just failed to penetrate the support level at $900, so this could be the first sign that are starting to see a possible short term reversal, but as always we will have to wait and see, and the current support level ( although small) will be key to any rally back up. In the last three days the spreads have also narrowed on each day, again suggesting that we could see a bounce back today. For any sustained move we will need to see prices move back above all three moving averages once again. Clearly the bearish engulfing signal we saw in the weekly charts is the dominant factor at present.

The short term outlook is bearish, the medium term is sideways, and the long term is bullish.

Support: $906.21 (40 day moving average) Resistance: $938.85 (9 day moving average)

Support: $899.45 (yesterday’s low) Resistance: $932.75 (high of 03/03/09)

Support: $890.40 (low of 10/02/09) Resistance: $922.77 (yesterday’s high)