Spot Gold Price - Daily Gold Chart 10th June 2009

Yesterday’s modest recovery in the spot gold price, was primarily as a result of a re-emergence of dollar weakness and the price of gold ended the day $1.95 higher to settle at $955.75 per ounce.  Technically we are now approaching a delicate and potentially complex point in the daily gold chart for a number of reasons which I will try to explain as follows.  First in the last 6 days we have had two bearish engulfing signals, the first of which was on Wednesday, last week, followed by a second on Friday which was triggered by the NFP employment data and a temporary return of dollar strength to the market, with the closing price of that day finishing below both the 9 and 14 moving averages.  This Monday’s candle then produced a “hammer” candle which, whilst not indicative of a reversal, certainly suggests that the selling pressure in spot gold prices was absorbed by the market with a return of the bulls.  Yesterday’s candle on the gold chart provided a long legged doji which is generally considered a sign of indecision and therefore indicating a possible turning point, so the question, of course, is which direction can we expect the price of gold to take?  In order to answer this question we need to consider some of the broader aspects of the gold chart, which includes the fact that prices are still below both the 9 and 14 day moving averages, but this is counterbalanced by the fact that gold prices on both Monday and Tuesday found support at the $955 per ounce price point.   Given the above analysis, and bearing in mind that we have some conflicting signals at present, my feeling is that on balance I expect gold prices to move higher once again in the short term, not least because we seem to have found some support at the price point outlined above. In addition if we look at the dollar index, which provides a view on the future strength or weakness of the dollar, this looks decidedly bearish once again in the short term.

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

Support:    $946.80 (yesterday’s low)                                   Resistance: $982.80 (high of 04/05/09)

Support:    $935.55 (low of 21/05/09)                                   Resistance: $966.90 (9 day moving average)

Support:    $924.75 (low of 20/05/09)                                   Resistance: $961.80 (yesterday’s high)