Gold has potential to drop to $1,200 an ounce

UNITED STATES March 15 2016 11:38 PM     

NEW YORK (Scrap Register): Gold’s rally so far this year has  the potential to move to the metal back up to $1,200, but it remains in an  overall downtrend, as per analysts.

“The trend on gold tends to trade in  trends that can last years, and is currently in a bearish trend that started  four years ago, and is now approaching some long-term support around $1000 where  it may level off for a few years in a bottoming range,” said Bob Dickey,  technical analyst for RBC Capital Markets.

“The current bounce has the  potential to reach the $1150 to $1200 area, but that would likely be another  short-term peak within the overall downtrend. A true long-term buy point for  gold could still be years away,” Dickey added.

After nearing a  three-month high Monday, April comex gold futures settled 1% higher on the day  at $1,128 an ounce.

Dickey also commented on weaker oil prices, which  have been weighing on commodities as a whole.

“A final low point for oil  is not yet apparent, but it has found some near-term support at the 30 level and  could now trade in about a 30-40 range for the next several months,” he said.  

“After such a big decline, a longer bottoming period is likely, so there  may be no urgency to buy oil-related investments for several months. We would  like to see the 30 level be tested and hold in order to better determine that a  bottom has been reached,” Dickey notted.