Gold Has Potential To Reach $1,400 - RBC Analyst

By Paul Ploumis (ScrapMonster Author)

May 03, 2016 03:30:48 AM

(Kitco News) - Gold’s rally continues, and according to one technical analyst known in the industry, the uptrend could push prices $100 higher. 

“The trend on gold is in a strong short-term uptrend that now has the potential to reach the 1,400 level over the next few months,” said Bob Dickey, technical analyst for RBC Capital Markets, in a research report released Monday. 

However, despite this relatively bullish call, the analyst said it is still too early to tell if gold’s momentum will remain longer term.

“It is still too early to determine if the current rally is the start of a longer-term uptrend, or just a move to the top end of a range,” he said. “So, we suspect that gold-related issues will be possible sells if the metal gets close to 1400.” 

Gold prices managed to hit a 15-month high over $1,300 an ounce Monday after falling back slightly. June Comex gold futures last traded up $2.20 at $1,292.70 an ounce.

A major contributing factor to the rise in gold prices has been a weaker U.S. dollar, which is trading at levels last seen in early 2015 at around 92.65. According to Dickey’s analysis, the dollar could see some pressure. 

“[I]f it were to break below that [93] level, the next technical target would be to below 85, and would likely mean that the recent range was a top that could stand for several years,” he said.

The report also provided a chart outlining several sectors in the market and whether they are emerging from bottoming trends or likely to gain momentum. “We currently see few market sectors that we would judge to be at timely long-term entry points, which implies that there may be higher general risk in the stock market at this time,” Dickey noted.

Looking at the chart, both gold and silver remain in the “early bull trends” part of their cycles and would be a “buy” right now.

Courtesy: Kitco News