Adam Sarhan Reuters Quote: Gold could rally further after breaking above $1,400: Analysts

ReutersBy Reuters | 27 Aug, 2013, 02.36AM IST
NEW YORK: Gold’s break above $1,400 an ounce on Monday for the first time since June 7, and a bullish “cup and handle” chart pattern, suggest more gains are in store for the precious metal which may have bottomed out two months ago, technical analysts said. 
“There is a very high likelihood that we saw the near-term low on June 28, the last day of second quarter, as many big investors capitulated,” said Adam Sarhan, chief executive of Sarhan Capital, referring to a final wave of selling at the market’s bottom before prices rose again. 
After touching $1,406 per ounce briefly on Monday morning, bullion has recovered over $200 since the end of June when prices hit three-year lows of $1,180 amid talk that funds were being forced to sell to meet client redemptions.
Hedge fund managers, including gold bull John Paulson, sold stakes in SPDR Gold Trust, the world’s biggest gold-backed exchange-traded fund, in the second quarter, betting that the Federal Reserve would end its stimulus program as the world’s No. 1 economy improved.
Since then, gold prices have staged a sharp recovery as lackluster US economic indicators including new home sales on Friday and durable goods data on Monday added to confusion over when the Fed may curb its bond-buying stimulus.
On Aug. 9, the yellow metal’s breakout of its “handle” coincided with its breach of its 50-day moving average, indicating gold had bottomed and hedge-fund managers could aggressively buy back their gold positions, Sarhan said. 
With gold now trading above its 50-day moving average and below its 200-day moving average, the 50-day is heading for a break above the 200-day, a significant bullish formation known as “golden cross” which would suggest the metal’s momentum is growing. 
However, analysts with a less-certain outlook say bullion needs to clear major resistance levels before the market can assume a better technical footing for the long term.
Bill O’Neill, a partner in commodities investment firm LOGIC Advisors, said $1,425 is a more important price level than $1,400.
Rick Bensignor, head of trading strategies at Wells Fargo Securities, is watching for it to break the 200-week moving average around $1,471 an ounce.
“I can’t say it’s out of the woods yet. Technically it’s too early to necessarily say that this is anything more than a short-term bounce in a somewhat negative market,” Bensignor said.

Be The First To Know

Free Email Alerts

Powerful Ideas & Market Insights Delivered Directly To Your Inbox Each Week

Reuters Quote: Gold Falls On Techincals, Options Selling

By Frank Tang
NEW YORK (Reuters) – Gold fell in light holiday trade on Tuesday as technical weakness, options-related selling and a lack of fresh economic news failed to stimulate buying interest in the final week of the year.
Selling related to the expiration of U.S. January gold options, which weighed on bullion despite rallies in crude oil, grains and a weaker dollar. A mixed bag of U.S. consumer confidence and home prices data kept investors on the sidelines.
Gold is on track for a 9 percent fall for December. Prices earlier in the month plunged below key technical support they had held for nearly three years, fueling fears that bullion was close to ending a more than decade-long bull run.



“Technically, a close above the 200-day moving average at $1,628 in spot gold is still needed to reinstate a bull market,” said Carlos Perez-Santalla, precious metals broker at PVM futures.
“The gold market will see odd movements this week as many money managers have closed out the year, leaving the market with technical and headline-sensitive traders,” he said.
Spot gold fell to a one-week low of $1,588.89 earlier in the session. It was down 0.8 percent at $1,592.80 an ounce by 2:06 PM EST.
Some traders sold in-the-money options ahead of the expiry of COMEX January gold options at Tuesday’s market close, said George Gero, vice president of RBC Capital Markets.
This year to date, gold is up 12 percent – one of the few investment assets that posted sizable gains in a rather difficult 2011 largely plagued by U.S. double-dip recession fears and the European debt crisis.
U.S. February gold futures settled down $10.50 at $1,595.50. Volume was below 50,000 lots, among the weakest turnover this year but consistent with the year-end trading volume last year.
Adam Sarhan, chief executive of Sarhan Capital, said gold’s trading below its long-term rising trendline on weekly charts suggests bears remain in control.
The precious metal will have to either rise above its 200-day moving average or its key upward trendline – which has now become resistance – before another significant rally, Sarhan said.
Gold, which has recently taken to follow the equities market and riskier assets, largely ignored U.S. economic news including an eighth-month high in consumer confidence, and another report showing weak home prices.
Also weighing on sentiment was news that Chinese authorities would ban gold exchanges in the country outside of two in Shanghai. China and India are the top two consumers of physical gold.
Spot silver fell 1.2 percent to $28.69 an ounce.
Holdings of the iShares Silver Trust SLV, the world’s biggest silver-backed exchange-traded fund, declined nearly 1 percent on the day to 9,605.79 tons by December 23, the lowest since mid-July.
Among platinum group metals, platinum edged up 0.4 percent at $1,430.24, while palladium gained 0.5 percent to $660.99 an ounce.