Spot Gold Price - Daily Candlestick Chart January 15th 2009

Spot Gold Price - Daily Candlestick Chart January 15th 2009

The spot gold price closed down yesterday on the back of sharply weaker equities markets, which probably triggered margin calls as I  have mentioned in previous posts. Additional pressure seems to be coming from falling daily crude oil prices. Lately, economic data has shown  continuing deflationary concerns, and gold’s feature as a hedge against inflation is simply at odds with the current trend of declining prices or even just expectations of such declines. A continuous strong US dollar is likely to hurt gold as well, at least in the short term as they are usually inversely correlated. Todays news is the ECB interest rate decision, which is likely to be a 0.5% rate cut. Whilst this may already be factored into market expectations, if this converts into a strengthening in the US dollar ( as seems likely) then spot gold prices may decline further today.

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

Support:    $806.40 (yesterday’s low)                                 Resistance: $836.87 (9 day moving average)

Support:    $801.60 (low of 11/12/08)                                 Resistance: $829.30 (yesterday’s high)

Support:    $800.00 (psychological level)                             Resistance: $828.22 (40 day moving average)