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Commerzbank Forecasts Gold Price Rise and Support

Release Date: 
Tuesday, April 12, 2011

The price of gold may rise to $1,560 an ounce by the end of the year, a 7 percent gain, according to technical analysis by Commerzbank AG. Gold traded at $1461.30 per ounce at 6:52 a.m. Pacific Time on the New York Spot Market, down from profit-taking after the metal's recent streak of record price highs.

The International Monetary Fund said soaring oil prices and inflation in emerging economies pose new risks to global recovery but are not yet strong enough to derail it. "Gold should remain in demand as a safe haven in any case and the price should be well supported. Speculators and jewelry traders are likely to see lower prices as an attractive buying opportunity," said Commerzbank. "Investors may be eager to lock in profits after the recent rally..." said Ong Yi Ling, the Singapore-based analyst with Phillip Futures Pte.

The $1,560 level is based on point and figure analysis, Commerzbank analyst Axel Rudolph said in the report. "Other point and figure targets are at $1,515 and $1,530, so the $1,515 zone seems important, together with the psychological $1,500 level," Rudolph said. A price of $1,500 may be achieved before three months, he wrote.

In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index. Fibonacci analysis is based on the theory that prices tend to drop or climb by certain percentages after reaching a high or low. A point and figure chart gauges trends in prices without showing time or volume.

(Sources: "Gold May Advance to $1,560 an Ounce, Commerzbank Says: Technical Analysis," Bloomberg, April 12, 2011; "Gold Drops as Record Price, IMF Growth Reduction Prompts Investors' Sales," Bloomberg, April 12, 2011; "PRECIOUS-Gold eases as dollar steadies; silver gathers pace," Reuters, April 12, 2011)

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