Spot Gold Price Chart - January 19th 2009

Spot Gold Price Chart - January 19th 2009

We saw a big rally in the spot gold price on Friday with the chart showing a crossover above the 9 and 40 days moving averages. It was a significant move supported by a weaker US dollar, higher equities markets and possibly some short covering ahead of the weekend. The recent government decision to prop up troubled banks, namely Bank of America and Citigroup has also helped spot gold prices as renewed fears about an already frail financial sector have made their way into the headlines once again and triggered gold buying as a hedge against paper currency. A very typical response in times of weakness, but this was also helped by the release of weak figures from South Africa, the world’s largest supplier of gold, indicating that year on year production figures for November had fallen by nearly 9% ( 8.7%). This undoubtadly helped the rally in gold prices on Friday, combined with the weaker US dollar.

The short and medium term trends are bearish while the long term trend is bullish.

Support:    $833.56 (9 day moving average)                              Resistance: $856.65 (high of 12/01/09)

Support:    $830.00 (40 day moving average)                             Resistance: $853.80 (high of 19/12/08)

Support:    $815.35 (Friday’s low)                                      Resistance: $851.80 (high of 22/12/08)