The Hindu Business Line : Technicals point upside for gold

IS the long-term downtrend in gold over? Chartists believe there is a strong indication that the long-term downtrend has completed with gold in euro terms having broken a critical resistance level.

On Friday, gold closed above Euro 350 an ounce. This completes a 3-year triangle formation projecting further gains towards Euro 400/oz, analysts with Barclays Capital pointed as part of global technical strategy.

Longer term, critical resistance is seen from the 363 peak of August 1993.

Much above here ends the pattern of lower pivot highs in place from the February 1983 high of 630, said Mr MacNeil Curry.

Gold ended the week at over $427/oz, up $3.35/oz buoyed by the US trade deficit data. Fundamentals, however, tell a slightly different story.

A meeting of the group of eight Finance Ministers is likely to see the UK Chancellor, Mr Gordon Brown, raise the idea of IMF gold sales to fund debt relief. Such a move, however, appears unlikely to find support, particularly from the US. In any case, the market is fully pricing in rejection of the proposal. Anything more flexible than that would prove negative for gold.

Previously the star of the complex, silver was the worst affected last week with prices falling all week since reaching $7.64/oz last Monday to go as low as $7.20/oz where it found support to recover to $7.27/oz thanks to remarkably resilient level of fund interest.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Technicals point upside for gold

Palm oil may test support level