Gold May Reach $1,300 an Ounce After Rally to Record: Technical Analysis
Gold May Reach $1,300 After Rally to Record
Jean Chung/Bloomberg
Gold may climb to $1,300 an ounce in the next several weeks.
Gold may climb to $1,300 an ounce in the next several weeks. Photographer: Jean Chung/Bloomberg
Sept. 15 (Bloomberg) -- Robert McEwen, chief executive officer of US Gold Corp., talks about the outlook for gold prices and strategy. McEwen speaks with Erik Schatzker on Bloomberg Television's "InsideTrack." (Source: Bloomberg)
Gold may climb to $1,300 an ounce in the next several weeks after rallying to a record, according to technical analysis by Commerzbank AG.
The attached chart shows gold will head for a so-called resistance level at $1,282 an ounce drawn from December last year. It will then rise to the “psychological” price of $1,300 by early October, based on 17-week cycles that have ended at or near short-term peaks.
“According to a cycle which we have been following since late 2008, the $1,300 region should be reached by the first week of October,” Axel Rudolph, a technical strategist at Commerzbank in London, said in a report. “From there at least a minor correction lower toward the $1,250 region should be seen before another up leg takes the precious metal to our medium- term upside target at $1,390/$1,400 in the first half of 2011.”
Gold for immediate delivery climbed to a record $1,274.95 an ounce in London on Sept. 14 and is headed for a 10th annual gain as investors seek protection against financial turmoil in Europe and the prospect of slowing economic growth. The commodity has outperformed global equities, Treasuries and most industrial metals this year. It traded at $1,267.20 an ounce at 6:46 a.m. in London today.
The second chart shows another “psychological” level of $1,400 near a 161.8 percent extension of gold’s advance from October 2008 through February 2009, projected upward from the April 2009 low. The level is based on so-called Fibonacci analysis.
The October 2008 low is significant because it was the starting point of the 17-week cycle pattern and most recent bull trend, Commerzbank technical analyst Karen Jones said by phone. The April 2009 low was used to project the extension because it was the first main pullback in prices since the almost two-year rally began.
In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index. Fibonacci analysis is based on the theory that prices tend to drop or climb by certain percentages after reaching a high or low.
To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net.
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