Everything that goes up, must eventually come down, and given the recent dramatic rise in the gold spot price, so the decline has been equally sharp, and first signalled by the deep hanging man candle of two weeks ago which, although initially not validated, has since been confirmed in the last few days. However, for gold bulls yesterday’s price action may provide some welcome relief, as spot gold ended the trading session with a long legged doji candle, representing indecision in the market, and therefore a possible turning point on the daily chart. This analysis is further strengthened by the 40 day moving average, which provided solid support to the low of the day, which gold prices bouncing off this indicator as a result. This suggests that the current move lower may now have run its course and, as a result, we could see a period of sideways consolidation in the next few days, before gold prices start to regain some of the lost ground of the last few days. With little in the way of potential support at this level, the 40 day moving average will remain our key indicator, and should we see a break and hold below, then we can assume that the bearish sentiment in the short term is likely to remain, with the next major support level some way below in the $1,065 per ounce level, and only minor support available in the $1,120 per ounce level.
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Support & Resistance for the Gold Spot Price :
S1: 1118.00 R1: 1146.80
S2: 1102.80 R2: 1160.40
S3: 1089.20 R3: 1175.60
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