While iron ore and copper prices were marked down sharply on Tuesday, gold managed to turn around a weak start to the day to eke out a slight gain by the end of regular trading.
In brisk dealings on the Comex market in New York gold for delivery in June was exchanging hands for $1,294.10 an ounce, the highest close since November 4 and up more than 12% so far this year.
In a research note Ole Hansen, Head of Commodity Strategy at Saxo Bank, points out this long-term chart which shows how gold once again has reached a critical area.
The trendline from the 2011 peak was tested and rejected on several occasions last year. The latest rally has taken it back to up to this line with resistance currently at $1,290/oz
The Danish bank maintains “a bullish bias” on gold and is holding onto its end of year forecast of $1,325 an ounce:
“The risk of a stronger dollar and successive US rate hikes are fading while plenty of geopolitical risks and light investor positioning is likely to support demand.”
Even better for gold bulls, Saxo predicts there will be a chance for gold bulls to pick up metal ahead of the move higher:
“In the short-term however we are looking for a correction with the $1,267-61/oz range offering a better level to enter fresh longs.”