spot gold trading

Spot Gold 26 Jan 2011

Following last year’s impressive 30% rise spot gold has had its worst start in 14 years falling over 6% and tumbling to a low of $1322.62 per ounce in yesterday’s gold trading session.  A number of technical and fundamental reasons have been posited for such a fall including investor appetite for risker assets such as equities and even Eurozone debt and a long overdue price correction.

From a technical perspective whilst yesterday’s small hammer candle hinted a short rally today, the breach of the 100 day moving average at $1355 per ounce was significant, and spot gold now has two critical areas to consider.  The first of these is potential support in the $1314.53 region and any break below this level may then see gold move below the psychological $1300 per ounce price handle and thereafter the 200 day moving average at $1283.33.  A test of the 200 day would be significant should the price reach that level and any break below would then signal a clear change of sentiment towards gold in the longer term.

On the weekly chart the key technical indicator is the 40 week moving average which is still providing good support and indeed has not been tested since July 2010 or breached since January 2009.

Is it too late to join the gold party?