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.