Gold rallied strongly yesterday to a high of $955, taking out the $945 resistance level in the process. Overhead resistance now stands at $967.

The US dollar weakened significantly against all the major currencies as the negative sentiment towards sovereign credit shifted from the UK to the US in the wake of the S&P report yesterday. S&P have put the UK on negative watch from a credit ratings perspective. The expectation that the US could possibly lose its AAA credit rating, triggered a sell-off in US bonds and the dollar simultaneously. Any actual downgrading of US credit ratings would have significant and wide reaching implications, not just for US bonds, equities and the dollar, but also for the wider financial markets. Gold and silver should continue to benefit from any further speculation in this regard.

Short term resistance remains at $967 and could prove to be a barrier to a move towards the recent nominal intraday dollar high of $1,006, traded on 20th Feb 2009. $935 will now act as short term support ahead of $915. Silver is also looking very bullish from a technical analysis perspective. At the moment silver is trading just below the $14.70 resistance level.