Analysis: Gold may continue to shine

A look at the technicals of gold's trading indicate firm support for the precious metal just below the $600 level, where previous falls in price saw buyers come back in around the $596 mark.

By SETH FREEDMAN
April 26, 2006 07:41
1 minute read.
gold graph 88 298

gold graph 88 298. (photo credit: )

 
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After decisively smashing through the $600 level in mid-April, the price of gold has traded more unsteadily, yo-yoing between $612 and $640 from April 19 to 21, indicating a high level of uncertainty over its next move. Based on the charts, Oli Greenspan, a trader at Hamilton Court Capital in London, suggested that gold "could feasibly extend the trend upwards" but warned that "a break below the [$612] lows made last week" might see it decline once more. A look at the technicals of gold's trading indicate firm support for the precious metal just below the $600 level, where previous falls in price saw buyers come back in around the $596 mark. There is also support, though less solid, at $620 per ounce, signaled by buying activity after the last retracement on Monday. If gold, which closed Tuesday at $634.20 in New York, consolidates its gains over the next week above the more bullish $620 level, it would appear - technically speaking - that another assault on the 25-year high of $645, achieved on April 20, is possible. For any stock/commodity, testing new highs on the chart brings with it a period of uncertainty, but in this case the uncertainty has been exaggerated by the radical swings in price and sentiment over recent sessions. Technical analysis is the study of trading based on previous performance, focusing exclusively on price movements rather than the fundamentals of the stock/commodity involved.

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