Spot Gold Prices - Daily Candle Chart 10th February 2009

As I suggested in yesterday’s post, we saw a fall in spot gold prices yesterday following the bearish engulfing signal of 6 days ago, followed by the shooting star and doji candles, indicating a short term weakness in the move and a reversal from the upwards trend of the past few weeks. Yesterday’s candle, mainly triggered by profit taking, saw spot gold prices fall through the psychological level of $900/oz and as a consequence crossed below the 9 and 14 day moving averages. A weaker US dollar was not much of a help with the influence coming from the equities markets, which showed an apparent recovery in some of the banking stocks. In the short term as markets await details of the stimulus bill, spot gold looks set to trade within a reduced range.

For today I would suggest that small short positions are the best approach, and my main concern would be the secondary support line at $875 to $880 per ounce. We could see this act as support today, alternatively if prices were to move through this region then we may see a pullback to $860 or even $850. My medium to long term view is still bullish for gold prices.

The short term trend is bearish, the medium term is sideways and the long term trends are still bullish.

Support:    $890.15 (yesterday’s low)                                    Resistance: $927.07 (high of 02/02/09)

Support:    $881.85 (low of 28/01/09)                                   Resistance: $920.10 (high of 06/02/09)

Support:    $873.95 (low of 29/01/09)                                    Resistance: $908.10 (yesterday’s high)