Commodities | May 11 2006
By Rudi Filapek-Vandyck
Gold bullion has kept its upward pace intact since crossing the US$700/oz with market commentators stating this bull run appears to have such a strong momentum behind it it’s probably safer not to bet against it.
Part of the strong momentum can be explained by a rosy outlook from a technical chartist perspective. At Standard Bank the precious metals experts stated yesterday already gold may or may not pause in consolidation above the magical US$700/oz level but the metal still seems poised to go for higher levels. The initial price target, according to Standard Bank, is at US$715 but if the metal manages to surge past US$725 all hell will break loose. Any dips should find support at US$685/oz.
Chartists at Commerzbank fully agree with the view the outlook for the metal remains positive. Commerzbank has set its longer term target at US$714/715 as the metal has swiftly left all previous price target levels behind. Nevertheless, Commerzbank remains cautious forecasting gold will achieve the new target by January 2007.
The chartists caution that in the vicinirty of their new price target there’s also the US$711/September 1980 peak as well as the US$722/78.6% fall from the 1980 to 1999 bear move. Commerzbank explains this is regarded a "major upside objective zone" and the chartists anticipate gold will fail on its initial attempts to move past the level.
At UBS the metals specialists note that regardless of the surging price, investors and speculators remain keen to keep on buying the metal. The analysts point out experienced gold traders have been seen taking profits recently because of major risks looming ahead, but this has not had a noticeable effect on the upward trend for the metal.
UBS recently increased its longer term gold price forecasts. The analysts comment, however, that the expected US$750/oz average for 2007 may well become reality much sooner. They add a challenge of the all-time high of US$850/oz this year already cannot be ruled out.