Gold Spot Price Chart - 16th March 2009

Gold Spot Price Chart - 16th March 2009

The gold spot price closed slightly higher Friday gaining $2.40 after initially crossing above the 14 day moving average and closing just below the 40 day average, leaving us with a small shooting star candle on the day. As I mentioned on Friday we needed to take a wait for spot gold and see approach, but unfortunately the price action on Friday has been less than convincing, and from a technical perspective, certainly looks as though the reversal of the last three days has run out of steam, with the high of the day failing to penetrate the $940 region of a few days ago. Whilst we do have support from the moving averages, given the nature of the candle and some apparent weakness, I would suggest waiting until we see a solid move back above the $940 region, which will then provide an excellent support level on the gold chart, with the moving averages all well below. The COT index for spot gold shows a similar picture based on the weekly CFTC futures data, and the latest gold price is now available in the live chart.

From a fundamental perspective, it seems that the recent pullbacks have attracted additional buying which was also fuelled by speculation that quantitative easing steps in the US are looming, following the comments and intervention by the Swiss National Bank last week. In addition a resurgence of  interest in gold Exchange Traded Funds and bullion from investors buying gold is widely regarded as an indication that investors continue to see buying gold as a hedge, remaining cautious about whether the equity markets can sustain the recent rally. My own view is that this week will see a reversal in the short term rally of the equities market, and a continuance of the bearish sentiment.

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

Support:    $919.00 (Friday’s low)                                      Resistance: $944.95 (high of 06/03/09)

Support:    $906.55 (low of 12/02/09)                                   Resistance: $942.10 (high of 09/03/09)

Support:    $890.40 (low of 10/02/09)                                   Resistance: $938.50 (Friday’s high)