Commodities | Jun 21 2010
By Rudi Filapek-Vandyck
From a technical perspective, spot gold did everything to excite expectations of the market bulls last week, including rising above key technical resistance on Friday. A weekly close above US$1250/oz on the back of a bullish looking triangle on price charts – how wrong can the metal go from here? Especially if one considers the fact that European debt problems are not going to melt away anytime soon (not to mention the US's problems).
No surprise thus Friday's move has led to various bullish statements and declarations over the weekend, including one trading alert by the team of technical market analysts at Barclays Capital. Spot gold, the analysts stated, would now embark on a rally towards US$1300/oz; at the very least.
But could it be that Saturday's announcement by the Chinese that the yuan-USD peg has been abandoned has added one extra layer of resistance for the precious metal?
Or are we about to witness one of those rather rare events when everything, from equities to crude oil, to industrial metals, to the euro and the Australian dollar, and gold will rise on the back of renewed global growth optimism?
Such a scenario would be possible, of course, if the world decides to sell some US dollar and US Treasuries in order to buy everything else in response to the Chinese weekend surprise.
The speculative community this time around is not overly positioned to the long side as gold has been mainly trading sideways these past few months. This in itself could prove to be a key positive.
In addition, breaking and closing above US$1250/oz has gotten every chartist in town excited.
Gold's previous closing high was posted in May at US$1252/oz. Friday's closing price was US$1256.50.
Now for the price action.