PRECIOUS METALS IN A BREAKOUT MODE
Gold and silver are both higher with silver posting an excellent gain, up $.39. Gold is up $5.70 in early trading. The dollar is slightly weaker, down 4 basis points and oil is up $.46 at $68.51 a barrel. The Dow is up a fraction and the Nasdaq is down. The precious metals look quite strong.
With the precious metals clearly in a breakout mode, it would appear that $1,000 an ounce is no win view. With so many analysts forecasting that gold will rise well above $1,000 and perhaps never look back again on that number, it is wise to be accumulating precious metals before the really big up move begins. Already we are seeing an enormous increase in the volume of trades and interest among the public at large. One can only imagine the kind of volume that might be seen after gold passes through the $1,033 resistance, as is being forecast by Barclay's Capital. JP Morgan/Chase said they see U.S. GPD growth hitting 4% in the 3rd quarter. If that proves to be correct, it will certainly ignite inflationary fears. That could be one of the factors driving the gold market.
On the other side of that coin, the number of workers filing new claims for jobless benefits fell 4,000 to 570,000 last week. Moreover, continuing claims rose 92,000 to 6,234,000. Of course this does not include the other categories of unemployment,which are generally ignored by the media at large. With the jobs market so weak, the Fed will continue to maintain an accommodative stance and that should be bullish for gold. RBC Capital analysts said they see continuing follow through buying in the gold market. That is one of the factors pushing gold higher today.
Clearly, from a technical point of view the breakout has triggered buy stops and that is continuing to support the market. In fact all the way up through $1,000 an ounce, buy stops will be hit causing further momentum for the upside. The same is true in silver. Standard Chartered Bank said a move above $980.85 would lead to $1,100 an ounce in the short-term. Clearly, having broken out above that level, I think many of the technical analysts see gold moving into the $1,000 to $1,100 range near-term.
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†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.
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- S&P Capital IQ - Gold: $1,900 (in 2012) "Leo Larkin, metals and mining analyst at S&P Capital IQ, thinks that $1,900 gold might not be that much of a stretch [in 2012]. 'Gold has been ..."
- Citigroup - Gold: $2,300 - $2,400 (by end of 2012) "While we remain cautious on Gold in the near term...we continue to believe that the bull market remains intact...we believe that 2012 may be..."
- Leeb Capital Management - Gold: $2,500 - $3,000 (in 2012) "I'll give you my target for gold at the end of 2012, it's going to be trading somewhere between $2,500 and $3,000. This..."
- Global Hunter Securities - Gold: $1,800 (in 2012) "'What I am looking for is a gold price of $1,800 an ounce in 2012,' says Jeffrey Wright, senior research analyst at Global Hunter..."
- US Global Investors - Gold: $3,600 (by 2017) "'People get so caught up with the next three minutes for gold and they should really be focused on the next three years,' says Frank Holmes, ..."
- Goldman Sachs - Gold: over $1,900 (in 2012) "Wall Street investment bank Goldman Sachs predicts that gold's bull run will continue into 2012 with a low interest rate environment and..."
- CNBC - Gold: $2,400 (no period given) "Gold will top $2,400 an ounce. The long-term bull market in gold marches on. Gold won't make a straight shot to a new inflation-adjusted high. As long..."
- Nomura - Gold: $2,000 (by end of 2012) "Nomura has raised its forecast for gold prices to $2,000 an ounce by the end of 2012, from $1,800 earlier. The brokerage said the low-interest rate..."
- Morgan Stanley - Gold: $2,200 (in first half of 2012) "Gold will lead a rally in commodities in 2012 as Europe's sovereign-debt crisis continues to roil financial markets, spurring demand for ..."
- UBS - Gold: $2,050 average in 2012 "[Gold] remains one of the top commodity picks for 2012 as 'most of the factors that pushed gold higher in 2011 are not going away,' according to UBS..."
- Bank of America Merrill Lynch - Gold: $2,150 - $2,200 (average in 2012) "From a technical perspective we believe that the bull trend for gold remains intact… with gold having not yet met any of..."
- TheStreet.com - Gold: $2,500 (by May 2013) "I want to own gold here. I think gold is going to $2,500 eighteen months from now... Gold has been up for ten straight years and this going to be the..."
