Spot Gold Price Chart 19 Feb 2010

Yesterday’s shock decision by the FED to raise its discount rate and subsequent surge in the US dollar has not, so far, impacted the spot gold price as much as expected, with yesterday’s gold trading session ending on a narrow spread down candle albeit with a deep upper wick.  What is concerning for gold bulls is that the high of yesterday once again failed to breach the $1125 per ounce price handle, the third time this has happened in the last 2 weeks.  The reason this level is significant is that it marks the underside of a relatively deep area of price congestion which extends up to $1150 and for the current rally to be sustained we need to see this region penetrated and breached.   Whilst the upside looks mildly weak at the moment to the downside we have decent support from the short term moving averages and with the 9 day crossing the 14 day this is adding a bullish feel to the present picture.  However, for longer term traders the current sideways price action is concerning and only a break and hold above the $1150 top will signal an end to this trading channel and allow for a sustained move higher.

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