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Gold may advance to US$920 after failing to break 200-day moving average
Source: BI-ME , Author: BI-ME staff
Posted: Sun April 12, 2009 8:08 pm
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INTERNATIONAL.  US gold futures may advance after the June contract failed to settle below its 200-day moving average last week, according to Technical Analytics.

Gold for June delivery closed at US$881 an ounce on 10 April, compared with the 200-day moving average of US$869.86. The contract, traded on the Comex division of the New York Mercantile Exchange, fell below its 200-day average in intraday trading on 6 and 7 April.

“We’ve had a two-day test of the 200-day moving average and we’ve held,” Chicago-based Technical Analytics President Al Bicoff told Bloomberg. “We are looking for gold to trade back in the US$920 area,”  Bicoff added.

Founded in the heart of Chicago's financial district at the Chicago Mercantile Exchange, Technical Analytics, specializes in providing professional commodity and futures traders with daily support and resistance numbers via a subscription service.

Bicoff, is registered with the Commodity Futures Trading Commission as a Commodity Trading Advisor since 1992, and has completed extensive empirical studies on topics including the Golden Ratio (Fibonacci Sequence), Gann lines, Moving Averages, Standard Deviations, MACD's, Stochastics and more.

Investors have bought the metal in the last several months to diversify their portfolios as equities plunged. Some investors also bought the metal as a hedge against inflation.

Gold has kept above US$860, a key chart level, due to dip buying because of persistent concerns about the health of the global economy and financial system.

Reflecting investor demand, the world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, said its holdings rose to a record 1,127.68 metric tons as of 9 April, up 0.31 metric tons from the previous day.

Meanwhile, JPMorgan has raised its gold price forecasts for 2009 and 2010, citing prospects for inflation and weakness in the dollar as supportive factors for the precious metal.

The US bank lifted its 2009 price view for gold to US$960 an ounce from US$831 previously, and its 2010 forecast for the precious metal to $950 an ounce from $825. "Investment demand continues to act as an offset, to some degree, to a very weak physical market in precious metals, gold in particular," the bank said in a research note.

"Inflation and/or US dollar weakness do however need to materialise to justify gold above US$1,000. In the meantime, the threat of these factors will support prices."

Fifteen of 25 traders, investors and analysts, or 60%, surveyed by Bloomberg News said gold would climb. Seven people, or 28%, forecast lower prices and three were neutral.

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