Spot Gold Price - Gold Spot Prices Daily Chart 7th August 2009

Spot Gold Price - Gold Spot Prices Daily Chart 7th August 2009

The effect of today’s Farm Payroll Data cannot be underestimated for several reasons and proving once and for all the cat’s cradle that is the financial markets.  Should the numbers come in better than expected then this will prove beneficial for equities as the market has proof positive that the worst is definitely over and the recent rally has been founded on solid fact rather than sentiment and wishful thinking.  This would also confirm that the worst of the downturn in the housing sector is over and the great American consumer is now ready to start spending once again.  The consequence of this scenario is that the US Dollar will continue to weaken and commodities, such as spot gold, will surge higher.  However, if the number is worse than expected then the worst is not over, consumer spending will still be in the doldrums and equity markets may suffer a correction.  This could lead to a bounce back in the US Dollar and a consequent fall in the price of gold.   All about will be revealed in the next 90 minutes.  Meanwhile from a technical perspective yesterday’s candle on the daily gold chart gave us a very clear and decisive signal ending the day with an almost perfect long legged doji, indicative of indecision and a potential turning point in the recent rally for spot gold prices.  Naturally we need to wait for this signal to be validated (or ignored), but when read in conjunction with Wednesday’s hanging man candle, coupled with three failed attempts to penetrate the $970 level it seems that we may have to wait a little while longer for a run higher through the $1000 per ounce level.  The $955 price level now comes into play as an intermediate support, and should this be breached then the next price point is $950 followed by $935.  Should we see the doji confirmed then the depth of any move will be dictated by the support levels coupled with any breach of the moving averages.