Commodities | Sep 15 2006
By Rudi Filapek-Vandyck
Technical chartists at Barclays Capital believe the short-term trend for gold remains downward. However, this does not mean the market is about to experience another meltdown of the magnitude of the May/June spot price decline, they hasten to add.
Citing “the bigger picture”, the chartists comment the gold market is likely to see what they describe as a “symmetrical triangle” to unfold against the backdrop of what they still maintain is a long-term uptrend.
Taken this longer view into account, the chartists believe that gold, just like oil (see story earlier today) is oversold (daily momentum). They believe trendline support at US$575/oz remains intact.
Assuming the gold price will stabilise above US$575 would imply a retest of the US$608 breakout level next week, they say. If true this would open up the possibility of a relief rally next week. Investors willing to buy into this are advised to stop out their long below Fibo[nacci] support at US$571.50.
Regarding the metal’s medium term outlook, Barclays Capital remains of the view that choppy trading patterns will precede the next move upwards. The chartists note weekly patterns/Elliott wave counts still suggest there are higher highs to come for the metal.