The long bull trend of the last few weeks for the gold spot price came to a shuddering halt on Friday, as gold moved sharply lower, breaching both the 9 and 14 day moving averages as a result, and ending the trading session with a wide spread down candle. Given the momentum of Friday’s price action, the question, of course is whether this is simply a reaction to the long bull trend, and therefore likely to reverse just as quickly, or if this is the start of a longer term structural change in investor risk appetite, which was, of course, triggered in the background by the Non Farm Payroll release. From a technical perspective, whilst Friday’s fall in gold prices was dramatic, the low of the day is still well above the 40 day moving average, and given that there was no advance warning of such a move, ( and certainly no indication of any weakness in the market ), then we must conclude that this is merely a temporary pullback which will be reversed in due course, and analysis which will only change should the 40 day moving average be breached which seems unlikely at present. Following the sharp sell off on Friday we may well see a reaction higher in Monday’s trading as gold bulls see this as a buying opportunity to enter long term positions for the next leg of the upwards move higher, which may well arrive sooner rather then later.
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Support & Resistance for the Gold Spot Price :
S1: 1135.76 R1: 1199.29
S2: 1110.22 R2: 1237.28
S3: 1072.23 R3: 1262.82
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