Gold May Extend Decline to Below $1,600: Technical Analysis

Gold, the worst-performing precious metal this year, may drop below $1,600 an ounce in the next couple of weeks after breaking a key support level, according to technical analysis by Commerzbank AG.

Bullion for immediate delivery has fallen below the 2012- 2013 support line of $1,641.83 and will then test the January low of $1,625.85, Karen Jones and Axel Rudolph wrote in a weekly report dated Feb. 13.

“The $1,625.85 level remains key for the medium-term trend,” they wrote. “Failure here should provoke a sell-off to below $1,600 level before the precious metal levels out and starts rising again.”

On a weekly basis, gold has fallen through the 2008-2013 uptrend line at $1,651.66 and may head down toward the $1,600 level, they said.

Gold has slipped 2.4 percent this year, underperforming an 11 percent gain in platinum, an 8.3 percent climb in palladium and a 0.2 percent rise in silver. Gold traded at $1,634.60 an ounce at 8:13 a.m. in Seoul.

In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index. A support level indicates a price at which buy orders may accumulate when a security is falling.

To contact the reporter on this story: Sungwoo Park in Seoul at spark47@bloomberg.net

To contact the editor responsible for this story: Brett Miller at bmiller30@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.