Spot Gold Daily Price Chart - 5th March 2009

Spot Gold Daily Price Chart - 5th March 2009

A very interesting day yesterday where we saw a divergence in spot gold and spot silver prices, with gold falling, and silver rising, with a gain on the day of 24 cents.So whilst spot gold produced a down doji candle on the day, the daily silver chart produced an up bar, which engulfed the small hammer of the previous day. As I mentioned in yesterday’s post, the hammer was the first signal that we could be seeing a short term reversal in prices, with the low of the hammer bouncing off the 40 day moving average which is always a positive signal. Yesterday’s candle has in fact provided us with a small bullish engulfing signal, and whilst this is hardly a strong sign, it could be worth attempting some small long positions intra day, particularly as this view is reinforced by the doji candle in the spot gold daily chart, suggesting indecision in the market and a possible turning point. Whilst I am not advocating this as the major reversal we have been waiting for, it could provide us as traders with some short term opportunities for today and tomorrow.

From a fundamental perspective, the move which was reflected across the base metals markets was largely attributed to news of a stimulus package in China which prompted traders to buy industrial and commodities stocks. As I have  mentioned several times before, in addition to having appeal to investors as a precious metal, silver is also more widely used for industrial applications than gold.

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

Support:    $12.660 (yesterday’s low)                                   Resistance: $13.380 (high of 02/03/09)

Support:    $12.575 (40 day moving average)                             Resistance: $13.314 (9 day moving average)

Support:    $12.410 (low of 03/03/09)                                   Resistance: $13.150 (yesterday’s high)