There were a number of worrying signs across the metals market that suggested that a significant correction was close at hand within the current longer term bull market, technical analysts for JP Morgan wrote on Thursday.
“We suggest some profits are booked on any further strength,” JP Morgan added.
On Wednesday, gold climbed to $677,30 a troy ounce, the metal’s highest level since October 1980 when gold fixed at a high of $690/oz, platinum reached an all-time high of $1 185/oz and palladium reached $381/oz.
The technical indicators for gold, silver, platinum, palladium, copper and aluminium prices were all bullish in the short, medium and long-term, JP Morgan
added.
For gold, the first line of resistance was $680/oz, followed by $700/oz and
then $711/oz, while first support was at $661/oz, then $649/oz and then
$643.80/oz.
At 09:10am, gold was quoted at $664,50/oz, unchanged from the previous close.
Gold was expected to see another correction phase below the $675/oz to $680/oz area of resistance, as the daily studies were not confirming this bout of strength, JP Morgan said.
“There is no stopping this trend at the moment and the latest bout of strength out of the short-term triangle is the start of the next leg higher,” the investment bank said.
“Upside targets at the moment are $700/oz followed by $711/oz, the previous
highs on the monthly charts, with a break through there in the weeks ahead probably opening the way towards $800/oz,” JP Morgan added.
For platinum the first line of resistance is $1 193/oz, followed by $1 210/oz and then $1 255/oz, while first support is at $1 158/oz, then $1 132/oz and then $1 112/oz.
Platinum was last quoted at $1 175.50/oz, up $1/oz from the previous close.
The price of the metal was starting to look stretched and JP Morgan was expected to see a corrective pullback towards $1 150/oz and then down to $1 100/oz to unwind the over bought nature of the metal.
The upside target for platinum in the weeks ahead was $1 200/oz, followed
by $1 255/oz and then $1 300/oz, JP Morgan said.
“What would be really bad and turn the outlook more bearish is a decline back through $1 100/oz channel and pivotal support,” the bank concluded. – I-Net Bridge