Gold Chart 8 Oct 2009

Gold Chart 8 Oct 2009

The strong surge higher in the spot gold price may be coming to a temporary halt as the market runs out of steam, with yesterday’s price action closing with a deep shooting star candle, suggesting a bearish tone to the move, and as a result we may see a pullback in gold prices either today or Monday. Whilst this is a strong signal to short the market, given the strength of the move and the speed, it seems unlikely that it will be anything other than a short term move lower, as gold traders bank profits ahead of the weekend and square some of their positions. All three moving averages are clearly pointing sharply higher, and with the bull cross of the 9 day and 14 day moving averages adding to the bullish tone, there is no reason to suppose that this is anything other than a temporary market correction in the rally. With excellent support below and no resistance above, the bullish sentiment seems set for some time, but as always we need to look for trading opportunities in the move, and the next few days may present opportunities to buy into the market as the gold prices pull back.

The short term outlook for the gold price is bearish, the medium term is sideways and the long term is bullish.