Technicals | Aug 27 2010
By Rudi Filapek-Vandyck
It is probably but a fair statement to make that gold hasn't lived up to expectations so far this year, despite a whole army of bullish commentators singing to the precious metal's praise in uncertain times.
More recently, market attention has once again shifted to the fact that the period from late August to early December is on historical trends usually the best performing time for gold. No surprise thus, many research reports on the metal these days highlight just that particular factor.
In technical terms, explain technical market analysts at Barclays this morning, gold has cautiously resumed its uptrend, but strong technical resistance at US$1242-45 is limiting further upside for the time being.
The analysts do believe gold will ultimately break through this barrier, but the question remains: when? And what will it take? More money printing in the US and in Japan?
Once the barrier will give in, gold will swiftly reclaim its all-time highs, predict the analysts, and make a run for US$1300/oz. Certainly, the latter target would be welcome for those who have been predicting such levels for the whole year now.
The analysts do have one warning for investors though and that is: overall market sentiment is already becoming elevated. Don't forget: gold is still trading below technical resistance at US$1242-45.
The team at Barclays suggests the overlty bullish sentiment might prevent gold from breaking through the barrier this month. Instead, the precious metal could close back below US$1232 and create a “divergence signal” while doing so.
The good news is the analysts remain convinced this would merely delay the inevitable rally, not put it off entirely. The analysts stick to their bullish bias while the price stays above US$1210/oz.
