Spot Gold Prices - Daily Gold Chart 4th May 2009

As the appetite for risk returns, as evidenced by firming equities and the prospect that swine flue is perhaps not as virulent or as serious as at first thought, this seems to have had a temporary effect on the safe haven status of gold in the last few days.  Indeed spot gold closed slightly lower on Friday losing 75 cents to settle at $885.80 per ounce and its recent failure to hold above the psychologically important $900 mark can now only add further downward pressure.

From a technical perspective Friday’s close for spot gold prices finished below all three moving averages with the high of the day bouncing off the 9 day moving average but with all three averages now converging around the $900 price point these indicators perhaps carry slightly less weight at the moment due to this convergence.  Indeed in this morning’s early trading for the price of gold we have already seen a price move upwards of $7 dollar which has crossed both the 9 and the 14 day, perfectly illustrating this point.  For gold bulls we need to see a sustained break above the resistance currently in place at $930 per ounce and supported by all three moving averages which should then lead to a move higher to re-test the $950 price point and above.  However, if the current downward pressure continues, the next key support line is at $865 per ounce and if this is penetrated with momentum, we could see a move dramatically lower in due course.  My view at the moment is that we are likely to see a further period of sustained sideways movement between $865 and $935 which will provide opportunities for swing trading intra day, but possibly not for longer term position or trend trading during May.   Indeed today provides an interesting opportunity to benefit from small intra day long trades given Friday’s doji candle, however, we need to bear in mind that all of this is against the backdrop of national holidays around the world both on Friday and today and therefore need to treat any trading with extreme caution as thin volumes make for unusual and volatile movements in all markets.

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

Support:    $879.55 (Friday’s low)                                      Resistance: $922.77 (high of 04/03/09)

Support:    $871.50 (low of 16/04/09)                                   Resistance: $918.50 (high of 27/04/09)

Support:    $864.25 (low of 20/04/09)                                   Resistance: $889.80 (Friday’s high)