Gold price consolidation coming to an end, watch for rally to $1,800 - market analyst
(Kitco News) - Gold ’s consolidation period could soon come to an end as one research firm sees prices pushing to $1,800 by the spring.
In a report published Wednesday, Florian Grummes, market analyst at Midas Touch Consulting, said that the precious metal needs a little bit more time to build up enough momentum to break above $1,600, but added that gold bulls are currently in control of the marketplace.
“Every dip is quickly being bought and the surprises are always happening to the upside,” he said. “Even though gold has already increased by over US$450 from the low at US$1,160 in August 2018, the bulls remain in control and are not showing any weakness.”
Looking at gold’s near-term technical picture, Grummes said that he is watching and waiting for a breakout above $1,590 to signal a move to his first-quarter target of $1,800 an ounce. He added that on the downside gold should continue to hold critical support around $1,550 an ounce. On the downside, a break below $1,535 would shift the market’s bullish sentiment.
“The back and forth between US$1,535 and US$1,600 now seems to be taking the form of a triangle,” he said. “Overall, gold will likely need more time within this triangle. However, at some point a breakout to the upside is much more probable as triangles usually resolves within the prevailing trend - which is obviously up.”
Grumme’s comments come as gold prices show modest gains Thursday as investors continue to worry about the impact the spreading coronavirus will have on global economic activity. April gold futures last traded at $1,579 an ounce, up 0.47% on the day.
But it’s not just gold’s technical picture, Grummes said that he is also bullish on gold as sentiment in the marketplace has still not reached the “euphoric phase,” even after the strong performance in 2019. He added that the break above $1,600 could be the factor that ignites the parabolic move he forecasts.