Spot Gold Price Chart - 28th April 2009

Spot Gold Price Chart - 28th April 2009

Yesterday’s stronger dollar was probably one of the reasons for the pullback in spot gold prices which finished $6.87 down on the day.  The stronger dollar was caused in part by remarks made by ECB member and Head of Austria’s Central Bank, Ewald Nowotny, who suggested that the ECB would be prepared to use “unconventional measures of quantitative easing to assure European firms and consumers access to credit at appropriate conditions,” and as Austrian banks are among the most heavily exposed to East European economies, many of which have fallen into a deep recession as credit has dried up, it is not surprising the market reacted so strongly to his comments.  The stronger dollar was also attributed to swine flu and its effects on the global economy should it turn into a pandemic.

From a technical perspective gold prices failed to breach the resistance level at $920 closing the day on a down bar below the 40 day moving average and in addition providing a “dark cloud over” bearish candle pattern, suggesting that we may see a move lower in the short term.  How deep this reversal is likely to be will largely depend on the support level at $900 per ounce and whether this holds firm.  If so then we could see the price of gold bounce off this point and resume the upwards momentum of last week, but any breaching of this region coupled with a break below the 9 and 14 day moving averages could see prices back towards the $880 and below levels once again.  My trading suggestion for today is to look for small short positions intra day in the 15 and 30 min charts using tight stops.

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

Support:    $904.35 (yesterday’s low)                                   Resistance: $929.12 (high of 02/04/09)

Support:    $889.45 (low of 23/04/09)                                   Resistance: $922.77 (high of 04/03/09)

Support:    $881.40 (low of 22/04/09)                                   Resistance: $918.50 (yesterday’s high)