Commodities | Mar 24 2010
By Rudi Filapek-Vandyck
Blame it on global risk appetite and the relentless uptrend for global equities, but gold aint going nowhere for the time being. A view shared by technical commodity analysts at Barclays Capital who report this morning that gold has now carved out, and completed a head-and-shoulders pattern on price charts.
The latter is a technical signal that usually indicates the road of least resistance leads south. No surprise thus, the analyst at Barclays foresee gold trending back to US$1079/65/oz, as that's where the next level of support lies. However, given the rather weak performance of gold this month, the analysts suggest it seems unlikely gold's fall would stop there.
They suggest USS1048/oz seems a far more likely price level to halts gold's price fall in the weeks ahead. It's where the 200-day moving average lies and this has proved to provide solid support in the past.
Bigger picture, and further away into the future, the analysts remain positive about gold's prospects, but not for now.
There is some good news though with the analysts observing gold stocks have recently outperformed the metal's price movements. They expect this to continue.
For silver, a close below trendline support at US$16.87 would confirm a move to US$16.33 and US$15.80/oz, predict the analysts.
Precious metals analysts at Standard Chartered concur with the above view. They observe physical buying interest for gold has remained strong just below the US$1,100/oz level. But they have also observed that buying interest drops off as soon as the price approaches US$1,110/oz. As such, they see an increased risk of a deeper correction.
The picture fits in with technical analysts elsewhere reporting the technical picture for EUR/USD remains weak and bearish overall.