Saturday, September 25, 2010
After hitting new highs consistently over the past week technical analysts give their views on where the yellow metal is headed next Posted: Friday , 24 Sep 2010
SINGAPORE (Reuters) -
Here are comments from analysts on their technical views of gold:
WANG TAO, MARKET ANALYST, REUTERS
Spot gold XAU= is expected to rise to $1,539 per ounce by the end of this year, going by its wave pattern and a Fibonacci projection analysis, but a drop below a pivotal support at $1,234 would violate the bullish outlook.
A long-term perspective on the monthly chart back to the 1960s presents a bullish scenario, with the existing wave "C" progressing towards $1,539, the 161.8 percent Fibonacci projection level, based on the length of wave "A", as the 100 percent level at $1,046 has been surpassed in January.
The wave pattern on the weekly chart (here) supports a bullish outlook, because the rally from the Oct. 2008 low at $680.80 is labeled as an impulsive five-wave mode.
The extended wave (5) is pointing to $1,515, as indicated by two upper trendlines meeting at a point, and a 161.8 percent Fibonacci projection based on the length of wave "1". Both the wave pattern and a triangle pattern on the daily chart (here) confirm the bullish views derived from the monthly and the weekly charts, as the rally from the Jul 28 low at $1,156.90 adopted an impulsive wave mode, with the wave "3" capable of pushing the price higher above the upper trendline of a big triangle, after which, gold will speed up the rally towards $1,539.
For a graphic showing the long-term gold technical outlook: here
TOSA ANASTASIOUS, TECHNICAL STRATEGIST, UBS
The medium term trend in gold remains bullish as the metal continues to post fresh historic high's. Momentum and trend studies still appear healthy and this supports the outlook for further gains in gold.
The focus is on $1,300.00 which is the next psychological resistance. Over the medium term, a bull channel gold has been in since Oct 2008 projects gains to $1450.00 over the coming months."
It is worth noting that at current levels, gold is overbought and this raises the chances of a correction over the near term. Key support has been defined at $1157.60 which is the July 28 low although support around $1220.00 should provide a firm foundation on any pullback. Dips would be seen as a buy.
JOHN SCHOFIELD, DIRECTOR, TEMPUS INVESTMENT CORP
As you know Gold is in a very nice long term uptrend, albeit punctuated by regular corrections. The current move targets $1,360 in my view as the rallies are about US$200 from the low points.
There may be temporary resistance at $1,300, being the measured target from the large 08-09 trading range. If the rally-pullback-rally pattern repeats itself my next target will be $1,500 after a pullback to $1,300.
These targets may prove to be conservative if the bull market starts to accelerate (as we would expect in the later stages of a major bull cycle) and the size of any upward moves gets bigger/longer each time.
DARYL GUPPY, CHIEF EXECUTIVE OFFICER, GUPPYTRADERS.COM
"The uptrend line starting July 28 is used to define the continuation of the uptrend as the price moves towards the next target level at $1,355. The September 13 reaction away from resistance and dip below the trend line was temporary.
"The price target level is calculated by measuring the width of the trading band between $1,160 and $1,260. This value is projected upwards and gives an upside target near $1,355."
"The trendline break is an alert signal. Trend reversal is confirmed with a move below the 15-day Exponential Moving Average."
For a technical outlook, click: here
By Ron Hera:
Hera Research Newsletter (HRN): Thank you for joining us today. You've commented that the Federal Reserve's policies have been linked to past boom and bust cycles in the US economy. Why do you believe that?
Dr. Marc Faber: Booms and busts happen also under the gold standard like we had in the 19th century various railroad and canal booms, and we also had real estate booms, first on the east coast in Chicago, then, at end of the century, in California. What the Federal Reserve has really done is create a lot of economic volatility. If you look back at the various crisis starting with the S&L crisis in 1990, then the Tequila crisis [the Mexican Peso crisis] in 1994, then Long Term Capital Management (LTCM), the NASDAQ bubble and at the current crisis, each crisis actually became worse and worse and the bubbles became bigger and bigger. The Federal Reserve did not pay any attention to excessive credit growth. The reason I am so negative about the Federal Reserve's policies is that they only target core inflation and argue that they can't identify bubbles, but when each bubble bursts they flood the system with liquidity that bring about unintended consequences.
HRN: What would be an example of that?
Dr. Marc Faber: Commodity prices peaked in May 2006 and after May 2006, especially in 2007, where there was actually a slowdown in the global economy and so there was no reason for commodity prices to go ballistic, but the Federal Reserve slashed interest rates after September 2007. In a global economy that was going into recession, the price of oil went from $78 to $147 and that burdened the US consumer with additional "tax" of five hundred billion dollars. I am not saying that is the only reason but it helped push the US consumer into recession. The fact is that without the Federal Reserve's expansionary monetary policy after 2001, we wouldn't have had a housing bubble to the same extent. The Federal Reserve's policies basically encouraged sub prime lending; it's not the case that they discouraged it......read on
The Federal Reserve’s statement yesterday that inflation is below levels consistent with the central bank’s mandate for price stability means it’s time to buy gold, said Allen Sinai, chief global economist at Decision Economics Inc. in New York.
“That’s code for we don’t want to go the way of Japan so we’re going to print money,” Sinai said in a radio interview today on “Bloomberg Surveillance” with Tom Keene. “You gotta buy gold when those two central banks are doing what they’re doing.”
Gold for December delivery was 1.6 percent higher at $1,294.2 an ounce at 8:11 a.m. on the Comex in New York, after touching an all-time high $1,296.50. Bullion for immediate- delivery rose 0.4 percent to $1,292.60 an ounce in London, after earlier today rising to a record $1,295.
The Fed’s Open Market Committee said yesterday it was “prepared to provide additional accommodation if needed” to support the recovery and boost inflation. Gold, which often moves counter to the dollar, has advanced 17 percent this year and is heading for its tenth consecutive annual gain.
Sinai said he forecasts a $1,500 price for gold. “Inflation adjusted it’s still cheap as odd as it sounds,” he said.
By Gary Dorsch:
With the price of gold zeroing in on yet another major milestone, - $1,300 /oz, some heavy hitters in the marketplace are beginning to wonder if the yellow metal's rally, is getting a bit too frothy, or even worse, whether a speculative bubble is brewing, that might ultimately deflate under its own weight, and lead to a sharp correction. On Sept 15th, famed hedge fund trader George Soros said that gold prices might continue to rise, but warned that that gold is the "ultimate bubble."
"Gold is the only actual bull market currently. It just made a new high yesterday. In the present circumstances that may continue. I call gold the ultimate bubble, which means it might go higher. But it's certainly not safe and it's not going to last forever," he warned. Soros has been bullish on gold in a big way, and as of June 30th, the Soros fund held 5.24-million shares of the SPDR Gold Trust GLD, a stake worth about $650-million today. Soros's fund also held equity holdings in miners of gold and other minerals worth almost $250-million.....read on
By Dr. Jim Willie:
Japan has proved without confusion that 0% is a permanent stuck position. The United States will repeat the path, but with a vast mudslide. Japan has had the advantage of a strong industrial base, a sizeable trade surplus, and no war budget. Thus it has been capable of funding much of its own deficits. It does possess a big debt burden. But the US has $1 of new debt for every $1 in government revenue. The US war budget is almost as large as its total revenue. The US depends upon foreign creditors, many of whom have been thoroughly alienated. The emerging economy nations have embarked on initiatives to avoid the US$ in commerce. Apart from the structural and foreign angles, the US is stuck with a 0% policy. The USFed has no Exit Strategy at their avail, precisely what the Jackass has stated for over a year. It cannot manage any change, as sharp knives, machetes, and guillotines await on the other side of the monetary doorway. The present 0% road to ruin is fixed, as the USFed cannot change course from it. This is simple to see, when eyes are open and mind functioning rationally. The gaggle of US economists is locked in the Keynesian straitjacket, complete with commitment to its aberrations, mired in debt. They believe zero cost money can lead the way out of an indebted bind. They hold out hope of recovery, more than create feasible conditions for one. Together with the bankers, they show signs recently of awakening to their helpless helm devoid of tools, perhaps even an awakening to the systemic failure.....read on
By David Levenstein:
Silver has been on fire in the last few weeks and the price has moved from $17.50 to a hair above $21/oz in six weeks. That is an increase of 20%! Not bad if you have been long, too bad if you have been short.
Last Monday, not only did the grey metal break the psychologically important $20 an ounce level, it remained above $20 for most of the week sending prices of this precious metal to a 30-month high. At the moment there is a lot of momentum in silver as investors snap up bullion bars, bullion coins while funds add silver to their positions, and it seems that there is still some steam left in this current move that may take prices above $21 before we see a pull-back.....read on