13 Aug 2015
Gold could fade the recent spike – BBH
FXStreet (Edinburgh) - The research team at BBH believes the ounce troy of the precious metal could head back towards the $1,100 handle.
Key Quotes
“The price of gold rallied by about 5.25% off the five-year low set in late-July near $1172 an ounce to the high set earlier today. More than half this rally took place this week, seemingly in response to the heightened uncertainty as China changed its currency regime”.
“In the exaggerated reaction, some market participants rushed to judgment, concluding that China's move pre-empted a Fed rate hike in September. This, coupled with the uncertainty saw gold rally. However, as cooler heads are prevailing, the price of gold may reverse”.
“Technically speaking, it has stopped around where it should, and that is the minimum retracement of the last leg down, which began with the June 18 peak. That retracement is found near $1123.40 and the yellow metal peaked near $1127 earlier today”.
“If this is correct, then gold should test $1105-$1110 in the near-term. It may take a break of $1100, which also corresponds to the 20-day moving average to convince some of the tactical bulls that the correction is over”.
Key Quotes
“The price of gold rallied by about 5.25% off the five-year low set in late-July near $1172 an ounce to the high set earlier today. More than half this rally took place this week, seemingly in response to the heightened uncertainty as China changed its currency regime”.
“In the exaggerated reaction, some market participants rushed to judgment, concluding that China's move pre-empted a Fed rate hike in September. This, coupled with the uncertainty saw gold rally. However, as cooler heads are prevailing, the price of gold may reverse”.
“Technically speaking, it has stopped around where it should, and that is the minimum retracement of the last leg down, which began with the June 18 peak. That retracement is found near $1123.40 and the yellow metal peaked near $1127 earlier today”.
“If this is correct, then gold should test $1105-$1110 in the near-term. It may take a break of $1100, which also corresponds to the 20-day moving average to convince some of the tactical bulls that the correction is over”.