Spot gold has broken through the key $430 a troy ounce level in a very decisive fashion and the risk in the next few days and during the first part of January is for additional losses, analysts for investment bank JP Morgan wrote in a technical note on Tuesday.
At 8.15am, gold was quoted at $429,38/oz, down from Monday’s New York close of $429,75/oz. On Monday, gold fell to $426,60/oz — its lowest level since November 5 2004.
The next downside target is $420,80/oz, followed by $418,60/oz with a fall to $412/oz on the cards, JP Morgan wrote.
“Rallies are selling opportunities, with resistance located at between $432/oz and $433/oz as well as between $438/oz and $439,50/oz,” the investment bank added.
However, medium to long term, JP Morgan remains bullish about the dollar gold price.
“The medium-term risk remains to the upside, with the current decline expected to correct only a portion of the July to December advance, hence leaving the multi-year bull trend intact,” JP Morgan analysts wrote.
“Key support is $409/oz and as long as the market remains above there, we expect the completion of the correction phase to provide the platform for the market to extend higher in the coming months,” the bank added. — I-Net Bridge