Spot Gold Price Chart - Daily Gold Prices 19th June 2009

With spot gold prices currently in consolidation mode it is sometimes useful to remember that there are seasonal and cultural factors which can affect the spot gold price, factors which we have to take into account when analysing the gold chart.  Historical data suggests that from 1999 to 2008, returns of gold from the periods of August to January were better than that from February to July in 8 out of the 10 years and since 1979 this correlation has occurred 18 times in total.  Part of the reason for higher demand during this period has been cultural, with India leading the way as the biggest consumers of gold in the world (for weddings and festivals), although latterly they have been joined by the Chinese and the explosive growth of gold backed Exchange Traded Funds.   However, this year’s figures for India show that imports of gold in the first 5 months of 2009 stood at 39.6 metric tons, a decline of around one third for the same period last year, and in February and March India recorded zero imports.  Reasons for such a fall in demand have been given as the rise in the cost of spot gold coupled with a weakening of the Indian Rupee.   From a technical perspective the 40 day moving average continues to provide some buoyancy to spot gold prices which are now perched precariously on the lowest of our three moving averages, presenting a rather fragile picture.  With all three averages now beginning to bunch the technical picture is decidedly unclear and any small change in an associated market such as currency or equities will be enough to tip gold prices over the edge, with the $920 to $925 region then providing the first line of defence to any move lower.  For spot gold prices to move we would need to see a sustained break and hold above the $957 price point coupled with support from all three moving averages.  Given that we have the unusual “triple witching” today with expiry of options across all markets my trading suggestion is to stay out, particularly as we are now approaching the weekend with squaring positions and everyone waiting to see which way markets are going to jump.  Spot gold lost $7.62 in yesterday’s gold trading session ending the day at $934 per ounce.

The short term and medium trend is sideways, long term is bullish.

Support:    $929.74 (yesterday’s low)                                   Resistance: $961.87 (high of 11/06/09)

Support:    $919.95 (low of 14/05/09)                                    Resistance: $956.02 (high of 21/05/09)

Support:    $914.93 (low of 18/05/09)                                   Resistance: $941.50 (yesterday’s high)