Spot Gold Price Chart - 12th March 2009

Spot Gold Price Chart - 12th March 2009

Spot gold prices rallied yesterday gaining 11.60 dollars and moving back above the $900/oz level, leaving us with an up candle on the day. It is interesting to note that the low of the day was identical to that of Tuesday’s low, and in line with the support level at $894 in February, but this analysis must be counter balanced by the fact that the price of gold remains below all three moving averages at present. Initially gold prices metal held firm even as equities went higher and extended the gains as the stock markets dropped into negative territory towards the close, which could be interpreted as market scepticism that equities are in for a sustained rally, which is my own personal view. Nothing in the broader economic picture has changed substantially, and the recent rallies has  largely been based on a few words from the likes of Bernanke et al!  There’s also the perception that the inverse correlation of gold with the US dollar is making a comeback, and a weaker dollar could mean support for gold. Given the current situation then I would suggest a wait and see approach today and my longer term view remains unchanged, in that the current bearish reversal will be short lived and we will see a return to the bull rally in due course. However we will have to wait for this to be confirmed by the charts. A bounce off the current support level and a move back above the moving averages will indicate the bull move is back in place, whilst a fall below this support level will indicate further bearish sentiment in the short term.

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

Support:    $891.55 (yesterday’s low)                                   Resistance: $931.79 (14 day moving average)

Support:    $890.40 (low of 10/02/09)                                   Resistance: $922.77 (high of 04/03/09)

Support:    $873.95 (low of 29/01/09)                                   Resistance: $917.89 (40 day moving average)