Gold prices, currently trading $1,295, are nearing my short-term target of $1,325 and potential key reversal target of $1,394 (initiated here on February 8). Now, Citi Futures and Royal Bank of Canada (RBC) Wealth Management is also forecasting gold to reach $1,400, according to their technical analysis.
As prices closed above the 100-day moving average for the second consecutive day, gold has closed above the 50-day moving average every day since January 23. Sterling Smith at Citi Futures said this pattern could result to an 8.5 percent rise by the end of March. In 2014, after a 28 percent decline last year, gold has already rallied over seven percent (taken today’s gains into account).
The global sentiment is changing with increasing turmoil in emerging markets and the continued poor performance in the US labor markets, gold is looking more attractive as it bids higher along with the current equity rally. “The sentiment seems to be changing gradually, and gold is attracting bids,” said Michael Gayed, a chief investment strategist at Pension Partners LLC. Gayed said the ongoing money printing with support gold, while some are simply buying due to technicals.
George Gero, VP at RBC Wealth Management, said “the technicals indicate that there is some strength.” Gero believes once investors have more faith in gold and return to the market, gold prices will rise. After a near-30 percent haircut during the 12-year bull market, gold can be attractive to those worried about longer-term economics.