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Spot Gold Prices Fall On Bernanke Statement

Spot Gold Prices - Daily Chart 25th February 2009

The profit taking continued yesterday with spot  gold losing in excess of 26 dollars and breaking below the 9 day moving average with a wide spread down bar on the day. The move was largely attributed to comments by Federal Reserve Chairman Ben Bernanke who forecast that ‘the US recession would end in 2009 and recover in 2010 if government stimulus measures work’. Strange how such a small word as ‘if’ can have such a significant impact on the markets! The follow up was a boost in confidence prompting a rally in US equities markets which in turn triggered long liquidation in gold. My personal view is simply that this is a temporary blip in the bull move, and by the end of the week, I suspect that all markets will have forgotten Bernanke’s statement and moved on to other news and events. For the time being however we have to be cautious in our day trading, but yesterday’s down bar may have given us an excellent entry point to buy into the market for today, particularly if we see further falls this morning. I would therefore suggest you wait and see, and then buy on any reaction back up with a wide stop loss and certainly below the $925 region.

The short, medium and long term trends are all bullish.

Support:    $958.75 (yesterday’s low)                                   Resistance: $995.65 (high of 24/02/09)

Support:    $951.09 (14 day moving average)                             Resistance: $987.28 (high of 18/02/09)

Support:    $939.70 (low of 17/02/09)                                   Resistance: $968.27 (9 day moving average)



  1. liam says:

    I couldnt agree more with the analysis although to be really spot on in any market you need a crystal ball. if gold does go below $925 and starts to sink i would say all in gold and silver. Next month by all accounts is shapping up to be as bad as octobers devils month. With paper currency loosing value around the world at the same time its hard to notice that even though the dollars GONE UP, the purchasing power continues to be eroded. So if your dealing currencies its very difficult to make money when everything is going down at the same time. The ugly(contest) HAS BEEN GOOD FOR THE DOLLAR but with golds highs this week. it spell the end is nigh. The prince is about to find cindarellas golden shoes, the next gold break-out will be devastatingly high as the comex manipulation wont be able to stop the influx of paper currencies for real money, gold and silver. History is again about to repeat itself.as once again people will loose faith in paper money world-wide and revert back to what has always worked.gold and silver.
    ps any-one holding british pounds is insane or incredibly stupid. just repeat afer me Q-U-A-N-T-I-T-I-V-E E-A-S-E-I-N-G

  2. MIke says:

    llarn: I too, used to think that way until I became educated about what Ben is REALLY doing. He’s NOT printing at all. What he’s doing is an accounting trick. Sure, he has vastly increased the asset side (by buying Treasuries and also MBS, etc.), but his loans to the bank are coming right back to him. AND, he is paying .25% to reward the banks. In addition, IF he were to print, the bond market would instantly implode, and doom the currency. There is NO way he will do that, even as a last resort.

    Look for DEFLATION, not the reverse. IF we printed 24/7, and nothing but $100 bills, we couldn’t replace the wealth destroyed in the equity markets and the housing markets for 3 YEARS.

    Your thesis is flawed, my friend, although I wish it wasn’t. We are in for a nasty depression.

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