Technical Signs Say Gold’s Fall May Continue
Gold Signaling Rebound From September Slump
Paul Taggart/Bloomberg
Gold futures have more than doubled in the past three years.
Gold futures have more than doubled in the past three years. Photographer: Paul Taggart/Bloomberg
Sept. 29 (Bloomberg) -- Lincoln Ellis, managing director at commodity clearinghouse Linn Group and chief investment officer at Strategic Financial Group, talks about investor sentiment and the outlook for commodities including gold. Ellis speaks with Lisa Murphy on Bloomberg Television's "Fast Forward." (Source: Bloomberg)
Gold prices, down 14 percent since touching a record in September, are poised for more losses, according to technical analysis by Steel Vine Investments LLC.
Bullion’s advance from the Sept. 26 low of $1,535 an ounce to a high of $1,696.80 on Oct. 17 created a so-called bear flag pattern where price movements resemble an inverted flag, according to Spencer Patton, the Chicago-based chief investment officer for Steel Vine.
The metal’s plunge from a record $1,923.70 on Sept. 6 to the low on Sept. 26 created the so-called flag pole. Losses in the past three sessions signal the completion of the pattern, and that prices will resume their decline, Patton said. Gold may drop to $1,550 by the first week of November, he said.
“The market has decisively broken out of this pattern,” Patton said in a telephone interview yesterday. “Gold looks weak in the near term.”
Yesterday, gold futures for December delivery fell 0.4 percent to settle at $1,647 on the Comex in New York. The precious metal has slumped 2.1 percent this week after retreating 11 percent last month, the most since October 2008.
The bear flag pattern is signaled after a break occurs below a rising trading range.
In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index.
To contact the reporter for this story: Debarati Roy in New York at droy5@bloomberg.net.
To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net
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