Technicals | Aug 10 2010
By Chris Shaw
Gold has enjoyed a solid run of gains in recent sessions but technical analysts at Barclays Capital are now looking for a near-term top at prices of US$1211/1219 per ounce. This level represents the 50-day moving average and previous price congestion.
What adds weight to the view of the technical analysts is daily momentum is fast approaching overbought levels. In addition, price action of seven higher closes in nine sessions implies an overextended market.
A break of US$1,202 per ounce trend line support (where gold is right now) would confirm such a move lower, the analysts expecting this would open a push towards the midpoint of the US$1,156-$1,219 per ounce range. Gold is approaching a strong seasonal period however, so the analysts suggest any weakness is likely to struggle to reach range lows at US$1,154/$1,156 per ounce.
Once the pullback is complete the technical analysts at Barclays look for a return to trend, which suggests a break of US$1,219 per ounce and beyond. Medium-term the analysts see the larger bull trend targeting US$1,350 per ounce and higher later this year.
