The latest rally in gold's five-year bull-run may run out of steam once the metal approaches US$570 an ounce. With the spot price reaching US$564.40, its highest since early 1980.
With Tuesday's (17th jan2006) gains, the price of gold has risen 15%, or US$74, in less than a month as investors seek to hedge against a weakening U.S dollar, inflation concerns built around high energy prices and emerging financial imbalances in general.
Adding fuel to the current steep run-up are growing concerns over Iran's nuclear ambitions and possible bird flu pandemic given gold's traditional safe haven status. All this has been happening at a time when commodities are evolving into a mainstream asset class amid rumors that several central banks are buying bullion to diversify foreign reserves. There have also been concerns that the U.S Federal Reserve won't raise interest rates as much as previously thought, making the U.S dollar a less attractive investment option. Other precious metals have also soared to cyclical highs on gold's coattails, with silver hitting an 18-year high US$9.30 this week. Platinum is in all-time high overnight of US$1,051.50. While there is little sign of a change in the investment climate supporting precious metals, some analysts warn the dizzying trajectory of gold's recent run-up and its chart patterns suggest the market is approaching a short-term peak. Resistance Likely Around $565-$570/Oz.
The fundamental arguments are still quite persuasive for gold but from a technical point of view, as we get up toward US$565-570, we might see a situation where the market pauses for breath.
BUT thats not that easy.There are more BULLS in the market than BEARS. Gold's ability to puncture the major Fibonacci retracement at US$562.75 on Comex is a positive sign and means gold will probably test the monthly channel resistance line near US$569
A break of US$569 could spark rapid gains toward the former major pivot area of US$600-612, but more likely would see a few months of consolidation above the former monthly channel resistance line at US$503.80. The strategy should be to buy the dips when those corrections occur.
STRATEGY: International gold: Buy Gold at 547 levels, with a stop loss of 532 and targeting $570 / oz
: MCX gold BUY (FEB06) at 7885 levels, with a target of 8030
Pradeep Unni
9867 422279
With Tuesday's (17th jan2006) gains, the price of gold has risen 15%, or US$74, in less than a month as investors seek to hedge against a weakening U.S dollar, inflation concerns built around high energy prices and emerging financial imbalances in general.
Adding fuel to the current steep run-up are growing concerns over Iran's nuclear ambitions and possible bird flu pandemic given gold's traditional safe haven status. All this has been happening at a time when commodities are evolving into a mainstream asset class amid rumors that several central banks are buying bullion to diversify foreign reserves. There have also been concerns that the U.S Federal Reserve won't raise interest rates as much as previously thought, making the U.S dollar a less attractive investment option. Other precious metals have also soared to cyclical highs on gold's coattails, with silver hitting an 18-year high US$9.30 this week. Platinum is in all-time high overnight of US$1,051.50. While there is little sign of a change in the investment climate supporting precious metals, some analysts warn the dizzying trajectory of gold's recent run-up and its chart patterns suggest the market is approaching a short-term peak. Resistance Likely Around $565-$570/Oz.
The fundamental arguments are still quite persuasive for gold but from a technical point of view, as we get up toward US$565-570, we might see a situation where the market pauses for breath.
BUT thats not that easy.There are more BULLS in the market than BEARS. Gold's ability to puncture the major Fibonacci retracement at US$562.75 on Comex is a positive sign and means gold will probably test the monthly channel resistance line near US$569
A break of US$569 could spark rapid gains toward the former major pivot area of US$600-612, but more likely would see a few months of consolidation above the former monthly channel resistance line at US$503.80. The strategy should be to buy the dips when those corrections occur.
STRATEGY: International gold: Buy Gold at 547 levels, with a stop loss of 532 and targeting $570 / oz
: MCX gold BUY (FEB06) at 7885 levels, with a target of 8030
Pradeep Unni
9867 422279