Commodities | Mar 02 2007
By Rudi Filapek-Vandyck
Barclays Capital technical chartists latest update on resources markets is probably best summarised as not all precious metals are equal.
The team is very positive about prospects for palladium, believing the odds are increasing for a break higher. Investors will have to practice some patience though with Barclays reporting the metal’s momentum is currently rolling over on daily charts.
This is interpreted in that the metal is likely to struggle a bit initially, against US$325/oz, but a so-called topside break towards US$377/oz, then US$407/oz should follow.
Barclays believes the current sideways trading pattern for gold should be equally bullish, signalling the odds are in favour of making Tuesday’s sharp sell-off a one-day event only. If gold were to sink below US655/oz (the February 20 low) this would be the first damaging sign as it would break the pattern of higher highs and higher lows that have characterised the gold market since January 5 this year.
Assuming gold holds its ground at current price levels (circa US$665/oz), however, the chartists would be looking for further gains towards US$690/oz in the near term.
The latter would fall in line with the latest forecast by precious metals specialists at UBS, still considered the world’s leading gold trader. Media reports this week stated UBS has lifted its price forecasts for gold and silver putting spot gold at US$700/oz in one month and at US$750 in three months.
On the basis of Barclay’s charts the picture looks less rosy for silver, though. Barclays chartists point out the recent break of support at US$13.70/80/oz has likely signalled a more bearish picture is building. Momentum is forming divergences the chartists observe and this means the risk balance favours further near-term weakness towards the US$13.45/13.10/oz area.