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Gold Trading Analysis 18 Jan 2011

spot gold

Gold Chart 18 Jan 2011

The spot gold price firmed up early today on the back of a weaker US dollar and inflation fears but has since softened with a mild return to strength for the US dollar taking the spot rate to $1367 per ounce at time of writing.  As I have written in several posts on my personal financial blog, gold is having a difficult time recently regaining its upwards momentum and has basically been consolidating sideways since October last year.  However, it is only recently that the spot gold price has broken below our three shorter term moving averages and the danger is that gold could now be looking to target the 200 day moving average which is sitting in the $1275 per ounce region.

The weekly chart exhibits a broadly similar picture with the exception that the gold price has managed to stay above both the 40 and 200 week averages.  Indeed one of the most remarkable features of the recent bull rally in gold has been that on the weekly chart the price has not broken below the 40 week average since January 2009.  This key average on the weekly chart currently sits at the $1300 per ounce price region and if we do see a further strengthening of the US dollar in the short term, be prepared to see the spot gold price move to test the first layer of support between $1325 and $1350 before possibly falling back to the $1300 per ounce price point.

My longer term forecast for gold still remains $1650 per ounce which I expect to see achieved later this year.

Gold is the only commodity to buy but it may be too late to join the party!