Gold May Advance to $1,252, Commerzbank's Rudolph Says: Technical Analysis
Gold may advance as high as $1,252.35 an ounce, as long as prices do not drop below the 55- day moving average for two consecutive days, according to a report from Commerzbank AG technical analyst Axel Rudolph.
The precious metal has rallied from a three-month low on July 28 as concern that the global economic recovery is slowing boosted investment demand. Spot gold closed at $1,240.05 an ounce yesterday, the highest price in eight weeks and 2 percent from the record $1,265.30 reached on June 21. The metal traded at $1,239.90 at 12:31 p.m. in Singapore today.
“Spot gold is starting to slip out of its one-month uptrend channel and may revisit the 55-day moving average,” Rudolph wrote in the report. “The $1,250.45/$1,252.25 resistance area, containing the May and early-June highs as well as the 1.618 percent Fibonacci extension of the February-to- March advance, remains our upside target.”
A resistance level is where there is expected to be a cluster of sell orders. Fibonacci analysis is based on the theory that prices drop or climb by certain percentages after reaching a high or low.
The 55-day moving average for spot gold was $1,212.08 today. If prices drop below that level, there is “minor support” at the July 23 high of $1,204.45 and at the Aug. 10 low of $1,190.45, Rudolph said in the Aug. 24 report.
While gold is “trading above the latter level we will remain short-term bullish,” the report said. “Unexpected failure here would probably kick start a slide back toward the early July $1,184.65 low and perhaps even the $1,175.25 July 20 trough,” it said.
In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index.
To contact the reporter on this story: Wendy Pugh in Melbourne at wpugh@bloomberg.net
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