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Gold future prices – 15th October 2010

gold futures chart

Gold futures price chart - 15th October 2010

The December gold futures contract on Globex moved higher once again yesterday but with a muted tone, and having breached the $1380 per ounce early in the gold trading session, pulled back to close marginally below, with a narrow spread up candle and a deep shadow to the upper body. As with silver futures, this hinted at some short term weakness on the daily chart, which duly arrived today with the December gold futures contract trading lower this evening at $1364.60 having initially reached an intra day high of $1386.40 earlier in the session. This short term retracement has done little to dent the longer term trend however, as we continue to trade well above all three moving averages with both the 9 day and 14 day MA’s providing excellent support as the bullish trend for gold continues ever higher, and at present shows little sign of slowing or reversing soon.

From a fundamental perspective the threat of deflation continues to loom both in the US and elsewhere around the globe as central banks do battle in the currency wars in an effort to weaken their respective currencies, whilst investors worry about the best long term solutions for their assets. Gold of course continues to benefit in this respect as does silver, but the question many traders, investors and analysts are now asking is for how much longer can the current strong trend in gold and other commodities continue. With bonds, commodities and equities all gaining at present, one or more of these assets will experience a sharp sell off at some point soon – the question of course is when!

All I can say from a technical perspective is that the bullish picture remains firmly in place for the time being, with yesterday’s weakness merely a temporary retracement in an otherwise strong upwards trend.