Gold, trading near a six week high, may climb toward $1,162 an ounce should prices hold above $1,135, according to technical analysis by Commerzbank AG. The attached chart shows gold is near a three month resistance line, its February highs and a 50 percent retracement of its slide since December. The second chart shows bullion may climb to $1,150-$1,162 if prices hold above $1,135.
The $1,150 level would be near a 61.8 percent retracement of the metal’s drop since December, according to a series of numbers known as the Fibonacci sequence, while $1,162 would equal the January high. Gold reached $1,138.50 today, the highest price since Jan. 20, and traded at $1,136.45 at 10:44 a.m. in London. The metal is up 3.6 percent this year.
“The fact that last week’s correctly anticipated fall only took the gold price to $1,088 before giving way to another leg up shows underlying strength,” Axel Rudolph, a technical strategist in London, said in the report. “This is why we will become short term bullish if, and only if, the $1,135.50, 50 percent Fibonacci retracement is overcome.”
In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index. Fibonacci analysis is based on the theory that prices rise or fall by certain percentages after reaching a high or low.
From Nicholas Larkin, you can contact Nicholas in London at nlarkin1@bloomberg.net.
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