Spot Gold Price - Daily Candle Chart 6th February 2009

Spot Gold Price - Daily Candle Chart 6th February 2009

We saw spot gold prices moving higher yesterday but later in the session, as stock markets rose, gold gave back some of the early gains closing $4.07 up for the day. The move resulted from a combination of safe heaven buying and as a hedge against an increasingly expected inflation on longer term and happened in the face of a falling demand in key places like India or Dubai . Although a strong US currency usually undermines gold prices recently, concerns about the global economy seem to have the upper hand. Whilst the shooting star candle could be a sign of weakness, there are two factors to consider. Firstly, the lowest price of the day bounced off the 9 day moving average which stayed intact, and secondly the candle is not at a top, and therefore has less weight. However, following the bearish signal on Monday we should be careful in trading spot gold today, since we also have the Non Farm Payroll numbers later, which will affect all markets including stocks, commodities and currencies. Long term I am bullish gold, but in the short term I would suggest small long positions today for day trading, with stop losses below $870.

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

Support:    $901.50 (Yesterday’s low)                                    Resistance: $927.07 (high of 02/02/09)

Support:    $893.25 (14 day moving average)                              Resistance: $924.20 (yesterday’s high)

Support:    $881.85 (low of 28/01/09)                                    Resistance: $916.10 (high of 26/01/09)