Spot Gold Price - Gold Chart 7th October 2009

Following yesterday’s strong surge higher, it was no surprise to see the gold price take a breather yesterday , as the market moved marginally higher during the trading session, with many gold traders banking some profits and closing positions and waiting for the inevitable pullback, which may come today.  From a technical perspective this price action is all illustrated  by the upper wick to the body of the candle, and whilst not a full ‘shooting star’, is certainly indicative of this type of price action, suggesting that whilst the bulls are still firmly in control, a move lower is very likely in the short term, before we see a break higher in due course. With the strong support now in place below, any reversal will have some way to go before this area comes into play, and any fall in the gold price is likely to be symptomatic of the market ‘taking a breather’ rather than any longer term structural or fundamental change in the underlying sentiment for gold prices moving forward.  This positive sentiment for gold is likely to continue despite sharply falling demand in the retail sector.  Indeed it seems that owning gold is no longer seen as a hedge against inflation or financial Armageddon but as part of a balanced portfolio hence the interest from the more traditional institutional investors such as pension funds and insurance companies.

The short term outlook for the gold price is bullish, the medium term is sideways, and the long term is bullish.