Commodities | May 18 2006
By Rudi Filapek-Vandyck
It’s too early to say whether the correction in gold is over, precious metals specialists at Standard Bank told their clients overnight. In order for the metal to resume its bull trend the gold spot price should "ideally" consolidate around technical support levels at US$650 or US$685/oz or –even better- around the psychological US$700/oz level.
In case this all turns out to be nothing but a short market correction Standard Bank believes investors should see gold moving towards US$730, with the next "targets" at US$750 and US$800.
Colleagues at UBS prove to be less cautious, holding on to their view that gold will be at higher prices both in three and six months from today. They express the optimistic view that it all appears to be over now as far as the market correction goes.
Technical chartists at Commerzbank seem to be even more cautious than Standard Bank and UBS. They point out there are several technical indicators signaling this correction is far from over.
The team asks rhetorically how far are we likely to correct? Commerzbank thinks a minimum target is US$661/656/oz. To support the view, the chartists point out this level "represents a double Fibonacci support and short term uptrend".
They do see scope for the gold price to fall as low as US$610/oz which is described as another double Fibonacci level.