Gold Trading Prices - Spot Gold Price Chart 18th August 2009

Wither spot gold prices which during this recent phase of market optimism that has driven global equities more than 50% higher since March, have remained relatively stable.  Gold prices during this period have not really sold off dramatically during periods of elevated risk appetite, nor have they risen strongly through the many bouts of risk aversion.  Meanwhile the dollar sell off since March seems to have had a limited impact on gold trading.  So what will propel spot gold prices out of their current lukewarm gold trading range of $890 and $970 per ounce?  Inflation, where are thou?  Perhaps the gold chart and the Dollar Index can give us some clues.  Gold trading today was restricted to an extremely tight range and technically the session ended with a small up bar but with wicks to top and bottom reminiscent of a spinning top, and providing the small bounce we anticipated in yesterday’s gold market commentary.  The high of the day on the spot gold chart found resistance at the 40 day moving average which it failed to breach and therefore we must conclude that the bearish sentiment has carried over from last week.  In addition the effort to rise seems to have hit the top of the $938.50 resistance level adding weight to this bearish analysis.  This gloomy picture is further reinforced by the crossing of the 9 and 14 day moving averages indicating a bear cross on the daily gold chart.  Moving to the gold futures market a similar picture emerges and the bearish tone is confirmed here with today’s up bar occurring on relatively low volume and gold futures trading also restricted to a very narrow range, between $935 and $941 per ounce.  My inclination for gold trading in both the gold spot and gold futures markets is that prices are likely to fall in the short term perhaps to re-test the $927 region.

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

Support & Resistance for Spot Gold Prices

S1:    925.15    R1:   956.10
S2:    914.28              R2:   923.64
S3:    904.80             R3:   913.26