Technicals | Feb 04 2011
By Rudi Filapek-Vandyck
Commodities trader Dennis Gartman increased his exposure to gold earlier this week, but last night he observed how gold had been unable to put in a genuine rally, despite plenty of supportive news around, such as that China has been on a buying spree throughout December and January. It is Gartman's standard truism that an asset that fails to rally on good news usually means the outlook is bearish instead, so Gartman is watching gold very closely these days, while weighing up whether his gold exposure should be cut or not.
Technical market analysts at Barclays have no such doubts. They remain of the view that Gold has formed a base at around US$1300/oz and that the metal is readying itself for another surge above US$1400/oz. Market sentiment as measured by the DSI Sentiment Indicator has fallen to extreme lows, observe the analysts, and this has historically always preceded an upswing.
Short term the analysts believe gold is targeting US$1400/oz which provides technical resistance. Once this hurdle has been taken, the focus will shift towards demolishing the all-time high at US$1432/oz, they predict. The analysts at present have a target for gold at US$1460/1485.
For silver, the analysts are looking for a break above US$30.00/oz to resume gains through the all-time high at US$31.26/oz.
Technical limitations
If you are reading this story through a third party distribution channel and you cannot see charts included, we apologise, but technical limitations are to blame.