Spot Gold Prices - Daily Gold Price Chart 4th June 2009

Gold’s march towards $1000 per ounce was halted yesterday by a strong rebound in the US Dollar as investors and 95% of financial professionals thinking that the recent strong equity market rally is now coming to an end.   Evidence of this can also be seen in His Highness Sheikh Mansour bin Zayed al-Nahyan selling all 1.3bn of his Barclay’s shares, clearly a sign that the rally in financial stocks has come to an end and a signal for some serious profit taking.   Despite yesterday’s fall on the gold chart, spot gold is still up 12% this year.  From a technical perspective although the spot gold price did manage an inter day high of $989.95, before ending the day $18.32 lower to close at $964.50 per ounce, selling in  the latter part of the gold trading session included a degree of profit taking and technical factors as stops were triggered.

The wide spread down bar created as a result could be an early warning signal for us that the current rally is coming to an end with the bearish engulfing candle of yesterday, but as always we need to wait for this to be confirmed in the next few days. It is interesting to note, however, that the low of the day bounced off the 9 day moving average, suggesting perhaps that this may only be a temporary reversal following the strong move of the last few weeks. When prices react in this way, and the moving averages provide support, this can often be a signal that the rally has further to go, and is often considered an excellent signal that the reversal is simply the rally stopping for breath, before moving higher once again. However we need to be cautious in our gold trading in the next few days as we wait for any confirming signals, and with  NFP around the corner tomorrow, this may be a good time to wait on the sidelines for the next day or so, to see whether this bearish signal is true or false.

Support:    $960.30 (yesterday’s low)                                   Resistance: $1000.00 (psychological level)

Support:    $958.35 (low of 29/05/09)                                   Resistance: $995.65 (high of 24/02/09)

Support:    $944.00 (low of 28/05/09)                                   Resistance: $989.95 (yesterday’s high)