Gold is set to drop to the lowest level since 2010 after forming a symmetrical triangle, according to technical analysis by Bank of America Corp.
Bullion for immediate delivery will drop to as low as $1,250 an ounce over the next month after the “well-defined, symmetrical triangle” it formed since April 16, MacNeil Curry, chief of rates and currencies technical strategist at Bank of America in New York, said by telephone yesterday. That would be the lowest level since September 2010.
“Over the course of next month we’d look for the price action to trade lower to the $1,263 to $1,250 area before greater signs of a basing emerge,” Curry said.
Gold has fallen 17 percent this year as some investors lost faith in the traditional store of value after 12 years of gains. Bullion plunged into a bear market in April and traded at $1,383.45 an ounce by 7:35 a.m. in London.
The triangle is formed from the two-year low of $1,321.95 on April 16 and the rebound to $1,488.10 an ounce by May 3, Curry said. In technical analysis, investors and analysts use charts of trading patterns and prices to predict changes in a security, commodity, currency or index.