Prediction: Gold will hike 3rd attempt to USD2,000
Posted June 4, 2012on:
4th June 2012
Interest in the precious metals has waned in recent months and as a result prices have been range bound. Although further weakness would not be a surprise, lower prices are expected to attract bargain hunting.
Gold prices have tracked sideways in a $70/oz range either side of $1,650/oz. Downside spikes suggest good underlying buying.
Prices have struggled to get much lift even though the dollar has been weak.
The range bound market is also attracting less fund interest with both the long and the short positions reduced.
Prices are under pressure, but given all the uncertainty in the markets underlying support is expected to be strong.
Technical – The uptrend line on the daily chart puts support at $1,630/oz, whereas on the weekly chart, the long term uptrend line puts key support around $1,614/oz. The recent failed upside break above the resistance line around $1,660/oz suggests prices may well retest underlying support again. The turn down in the stochastics supports this view too. Overall, we would not get too bullish for Gold until prices move back above $1,700/oz, while on the downside we would get increasingly bearish as each support level is breached – these are at $1,630/oz, $1,623/oz, $1,614/oz and $1,612/oz. A drop below the latter is likely to prompt a fall back towards to lower blue horizontal line, which is at $1,522/oz. That said, moves below $1,550/oz may well turn into spike.