Spot Gold Prices - Daily Candle Chart 23rd February 2009

Well – we got there quicker that I thought! I must admit my feeling was that we would see this in the early part of this week. The most important feature of Friday’s trading session in spot gold was definitely the break above the $1000/oz mark on a wave of momentum and safe haven buying, before falling back slightly in later trading as some traders took profits off the table ahead of the weekend. Amid the slide in global equities markets which are heading to fresh multi year lows, more and more investors are rushing to gold to preserve their capital as a string of economic data showed last week a global economy continuously shrinking. It remains to be seen if gold is ready to test last March’s record high or after an impressive rally some traders will rather book part of the profits. So what can we expect today?

The daily chart is still in a strong bullish trend, and gives us no sign that the rally is due for a reversal just yet, but as always we need to be cautious. Whenever a price ( whether a commodity or stock) starts to be mentioned in all the news media, then we need to be careful as this can often signal a top as investors rush in joining the herd mentality. The weekly chart confirms the trend with a wide spread up bar, so my view remains unchanged for the time being with small long positions being the order of the day for today, with a stop loss below $940 -$950.  We should see prices reach the same level again and higher in the next few days with all the moving averages providing good support.

The short, medium and long term trends are all bullish.

Support:    $969.75 (Friday’s low)                                      Resistance: $1012.45 (high of 18/03/08)

Support:    $963.01 (9 day moving average)                              Resistance: $1007.55 (high of 14/03/08)

Support:    $960.30 (low of 18/02/09)                                   Resistance: $1006.25 (Friday’s high)