Commodities | Mar 22 2007
By Rudi Filapek-Vandyck
Technical chartists have been pointing out spot gold is facing a significant hurdle at US$690/oz which will have to be taken out before the precious metal can finally move past US$700/oz – a target that has been flagged by various bullish experts for many months now.
However, chartists at Barclays Capital believe a new hurdle has formed on the metal’s route to US$700/oz this year. Gold futures on comex recently left a wide price gap at US$664/oz on the charts and the team is of the opinion the level now serves as resistance. In addition, they note, trading volumes are in decline, which is regarded a worrying sign.
Barclays Capital believes gold will struggle to move beyond US$664/oz and may fall to US$633/oz first before doing so. If the metal finally manages to leave the gap behind it would better do so on increasing volumes, the chartists say.
All this suggests the metal will continue struggling when the overall environment, such as a US dollar under pressure and a rising oil price, would seem to favour a higher gold price.
Precious metals specialists at Belgo-Dutch financial conglomerate Fortis suggested exactly that in their recent update on matters. Predicting a “bumpy road” ahead for the metal Fortis still believes gold will ultimately crack the US$700/oz level “at some point” in 2007 – but the metal won’t be able to move much beyond the target, the analysts believe.
Interestingly, the analysts also suggest the future for silver may soon be dominated by the prospect of increased supply as Russia has seemingly sniffed an opportunity.