Gold Spot Prices - Spot Gold Price Daily Candle Chart 30th June 2009

Spot gold prices moved in tandem with the US Dollar yesterday, moving lower in early trading as the Dollar strengthened but then recovering as the dollar rally ran out of steam.  As a result gold finished 70 cents higher at $939.00 per ounce.  However, the price of gold is at an interesting tipping point as investors seem unclear whether to continue to buy gold as a safe haven or look for undervalued stocks, hence the importance of keeping a close eye on the equity markets during this next quarter.  Of course, if the US Dollar continues to weaken then gold prices should benefit accordingly and depending on the extent to which the Dollar weakens may once again bring into question the status of the Dollar and a call for a return to a version of the “gold standard”.   Meanwhile in the virtual world of online gaming (such as World of Warcraft) the use of “virtual gold” is used by players in less developed countries to play against gamers in the developed world.   The practice is known as “gold farming” and the trading of virtual currency for real cash generates between $200 million and $1 billion annually, according to a 2008 survey conducted by Richard Heeks at the University of Manchester.  However, the Chinese Government has just announced new rules which bans the conversion of this virtual gold into real money declaring that it can only be traded for virtual goods and services – not real goods and services.   Who says virtual games can’t teach those of us in the “real” world something of value.

Meanwhile to return to the gold chart, from a technical perspective yesterday’s candle ended the day as a doji with shadows to top and bottom and the body neatly sandwiched between the 14 day and the 40 day moving averages, which once again confirmed the delicate position for gold prices at present.  With Friday’s bearish indicator and yesterday’s indecision the price of gold is indeed finely balanced, and for gold bulls the principal point to note is that on both these days spot gold prices have found support at the 9 and 14 day moving averages.  However, this is counterbalanced by the 40 day moving average having crossed above both the 9 and 14 suggesting a possible bearish reversal so extreme caution is required at present. The catalyst may come towards the end of this shortened trading week with ADP figures on Wednesday and NFP on Thursday providing the drivers for equity markets which will no doubt influence the broader commodities and precious metal markets.

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

Support:    $933.50 (yesterday’s low)                                   Resistance: $961.87 (high of 11/06/09)

Support:    $929.25 (low of 25/06/09)                                  Resistance: $958.20 (high of 12/06/09)

Support:    $912.70 (low of 23/06/09)                                   Resistance: $942.75 (yesterday’s high)