We saw a sharp fall in spot gold prices yesterday as the profit taking continued, and the daily candle has provided a warning signal for us in the short term, with a bearish engulfing pattern created, which could be the first sign of a reversal in gold prices for today. In addition the two candles of Friday and Monday, provide a two bar upthrust or shooting star, again indicating short term weakness in the move at the moment, but it is important to note that the candle failed to touch the 9 day moving average, so the bullish momentum remains intact for the time being. The fall was triggered by weak jewellery demand highlighted by the Abu Dhabi Gold and Jewellery Group report showing gold jewellery sales down 70% for January in Abu Dhabi . Technically prices are holding above the 9 day moving average and with bullish signals still indicated by all the moving averages, the safe haven buyers may see this correction to the rally as a good buying opportunity.
The short term trend is bearish, the medium term is sideways, and long term trends are bullish.
Support: $897.78 (9 day moving average) Resistance: $929.45 (high of 30/01/09)
Support: $895.60 (Yesterday’s low) Resistance: $927.07 (yesterday’s high)
Support: $890.80 (high of 29/12/08) Resistance: $916.10 (high of 26/01/09)