Gold Cleared Its First Hurdle But The Race Is Still Running - Saxo Bank
(Kitco News)- The gold investors are breathing a much-needed sigh of reliefafter the precious metal pushed to a 10-week high, seeing its best gains in twoyears, but more work needs to be done, according to one commodity analyst.
In a report Friday, Ole Hansen, head of commodity strategy atSaxo Bank, said that after Thursday’s rally, which saw prices rise more than$29 on the day, he is now bullish on the metal in the short-term. Gold is holdingon to most of its recent gains, with December gold futures last trading at$1,223.2 an ounce, down 0.36% on the day. For the week gold prices are up 1.4%.
“The emerging softness in U.S. stocks this week combined with therecent rise in bond yields and speculation that the dollar may be peaking havetriggered renewed demand for diversification and tail-end protection,” he said.
While gold has pushed above critical near-term resistance levels,Hansen said that the market isn’t completely out of the woods yet. He warnedthat more work needs to be done to pressure bearish investors to cover theirshort positions.
“Gold has now cleared the first hurdle of resistance at $1,210/ozbut in order for this to be more than a weak correction within a majordowntrend it needs at a minimum to break above $1,238/oz, the 38.2% retracementof this year’s sell-off,” he said. “A correction over the coming days followingThursdays strong gains need to be halted ahead of $1,210/oz in order for thisimproved technical outlook to take hold.”
However, Hansen added that investors should not ignore the yellowmetal’s potential. He explained that if the near-record speculative shortpositions are reversed, prices could quickly climb $50 to $75.
“A continued focus on stock, bonds, and growth weakness and thepotential of the dollar running out of steam could see the metal embark on arecovery towards $1,300/oz, our year-end target. Much still depends, however,on the overall market sentiment, which has been rattled by rising rates andfalling stocks,” he said.
By Neils ChristensenFor Kitco News
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nchristensen@kitco.comwww.kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.  |