Gold Spot Chart 18 Feb 2010

Spot gold prices approached a tricky technical area on the daily chart yesterday with the high of the day touching the $1125 per ounce price point before closing the gold trading session lower with a relatively narrow spread down candle.  The minor price congestion now immediately above may present an obstacle in the short term and until this zone is breached we cannot be certain that the recent rally in gold prices is set to continue.  Nevertheless,  the technical signals look encouraging with support for the low of the day from the 40 day moving average yesterday and with the 9 day moving average now crossing above the 14 day this is adding further to the bullish picture.  This bullish view is further reinforced by an analysis of the open interest data extracted from the CFTC weekly reports, and with the recent fall in prices coupled with a reduction in open interest are suggesting that this short move lower is now set to reverse.  Further details of this analysis is available on the COT site.

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