Gold Chart - Daily Spot Prices January 14th 2009

Gold Chart - Daily Spot Prices January 14th 2009

After a weaker start spot gold prices managed to rally, closing slightly lower for the day. Considering the magnitude of the US dollar’s rise with additional pressure coming from lower stock markets, the price of gold performed rather well, but in the short term further breakdowns in the equities would mean margin calls, and that could in turn hurt the spot gold price. It is peculiar that appallingly bad US economic data is serving to support the dollar, when logic would seem to suggest that dollar weakness and gold strength should be the order of the day.

One possible explanation is if the world economic system is headed for years of turmoil, then the US is best positioned to weather the storm. If the world is plunging into a deep recession, then the US may be the place that emerges first. These may not necessarily be facts but they are the current perceptions of the market, which may turn out to be true ( or not). For the time being, they are the reason behind trading decisions. In the longer term, prices in the gold market may be supported by a higher inflation due to current liquidity injections.

The short term trend is sideways, the medium term trend is bearish while the long term trend is bullish.

Support:    $813.65 (yesterday low)                                   Resistance: $856.65 (high of 12/01/09)

Support:    $807.05 (low of 12/12/08)                                 Resistance: $836.10 (low of 08/01/09)

Support:    $800.00 (psychological level)                             Resistance: $831.20 (yesterday high)