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Gold Spot Price 22 Oct 2010

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Gold Spot Price 22 Oct 2010

The pullback in the spot gold price continued yesterday with a relatively wide spread down candle which closed the gold trading session at $1324.80 per ounce as it re-engages with a temporary bout of inverse correlation with the US dollar.  In other words this week’s temporary bounce in the US dollar has resulted in a consequent fall in commodities, all triggered by the Chinese interest rate decision.  This has also seen the first major pull back for gold since June 2010.  The question now is whether we are seeing a change in sentiment towards gold or simply a long, overdue correction and for this we need to consider the weekly chart for some clues.  As we can see the spot gold trading week is likely to end on a relatively wide spread down bar but one which is still well above all four moving averages, with plenty of clear water to the 9 week average at $1295.37.  What is perhaps also self evident is that given we have had 11 weeks of straight gains for spot gold, it is hardly a surprise to see this market pull back as investors and speculators bank profits, ahead of the G20.  The key will be whether from a technical perspective, the spot gold price is supported at the 9 week moving average and, if so, then we should see a bounce and recovery from this level.

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