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Gold Trading Analysis 18 August 2009

Gold Trading Chart 18 August 2009

Gold Trading Chart 18 August 2009

As spot gold prices continued to slide yesterday I hope you were able to take some profits on the way down as gold trading ended the session on a wide spread down bar which broke below the 40 day moving average closing deep within the support level between the $920 and $938 price band.  Following such a deep move we may see a small reversal tomorrow as bargain hunters come out in force to take advantage of gold’s recent reversal.  However, technically spot gold prices now look weak once again in the short term as the influence of the long legged doji candle of 7 days ago continues to persist.   With the 9 day moving average now about to cross the 14 day moving average this is also adding to the downwards pressure and should we see a breach of the $925 per ounce support region then this could lead to much deeper move, possibly to re-test the $900 per ounce level in the medium term.   The extent to which gold prices may or may not decline will depend on the US Dollar and whether it will continue to strengthen in the face of deteriorating equity markets.

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

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