Gold Prices Have Room To Run; Watch $1,357 - Saxo Bank
(Kitco News)- The gold market is taking full advantage of a quietholiday Monday by pushing to key resistance levels as the U.S. Dollar indexdrops to its lowest level in three years.
While American equity markets are closed for MartinLuther King Jr. Day, futures continue to trade through electronic platforms.February gold futures were last at $1.341.30 an ounce, up 0.48% on the day, whichis slightly off its overnight four-month high of $1,345 an ounce.
With the gold market continuing to build strong momentum,many analysts expect that it is only a matter of time before prices break theSeptember high at $1,357 an ounce.
“Gold has now rallied by [$110] from the December low andapart from an [$18] correction last week and despite being overbought (RSI),the metal is currently targeting the next area of resistance starting from$1350/oz and going up to the September high at $1357/oz,” wrote Ole Hansen, headof commodity strategy at Saxo Bank in a research note Monday.
While many commodity analysts are bullish on gold in aweaker U.S. dollar environment, Hansen said that gold has outperformed mostmajor currencies in the last month. He noted that gold is up almost 8% againstthe U.S. dollar, up 5% against the yen and yuan, up 4.5% against the pound andnearly up 4% against the euro.
At the same time, the U.S. Dollar Index, which is abasket of global currencies, is down 3% in the last month, he added.
While there is still room for gold to push higher in thenear-term, in an interview with Kitco News last week, Hansen said that he wouldlike to see a modest correction in gold prices in order to create a sustainablelong-term rally.
“Despite overstretched momentum indicators, a correctionremains elusive at this stage with gold being supported by continued dollarweakness and steady real yields amid rising inflation focus,” he wrote in hisreport.
Hansen isn’t alone in his expectation for goldto test the September 2017 high, with many analysts saying that they arebullish on gold as prices remain above $1,300 an ounce.
By Neils ChristensenFor Kitco News
Follow neils_C
nchristensen@kitco.comwww.kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.