NEWYORK, Mar. 5 -- Gold priced in euros will continue setting records, Fortis Nederland said, citing trading patterns.
Gold denominated in the 16-nation currency reached an all- time high of 836.98 euros an ounce on March 2, nearing its medium-to-longer-term technical upside target of 900 euros and above, said Wallace Ng, Hong Kong-based executive director of commodity derivatives at Fortis Nederland NV.
"Because we are in uncharted territory, based purely on technical projections, the target price should be over 900," he said in a telephone interview. "The weekly chart has formed a reliable bullish pattern called cup and handle, and when it broke the 790 neckline, it's pointing at 900 and above."
A so-called cup and handle pattern occurs when the price of a security reaches a high and then takes a bowl-shaped U-turn. When the price approaches its previous high, investors who bought at or near that level tend to sell, causing the price to drop slightly. After this, the price tends to increase significantly.
"The price pattern shown on the chart is one of moving higher, consolidate, and then higher again," said Ng.
Gold in euro terms has advanced 8.6 percent this year as the currency tumbled 4.4 percent against the dollar on concerns that the economic recovery in the region may falter, prompting investors to seek the precious metal to preserve wealth.
In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index.