Gold futures may rebound to $1,500 an ounce in June after hitting a "double bottom" yesterday, according to technical analysis by R.J. O'Brien & Associates. A double bottom is a chart pattern showing a drop, a rebound and then another decline approaching the previous low usually indicating support.
By Debarati Roy
May 20, 2013 4:00 PM MT
Gold futures may rebound to $1,500 an ounce in June after hitting a “double bottom” yesterday, according to technical analysis by R.J. O’Brien & Associates.
The price may climb 8.4 percent from yesterday’s settlement after touching $1,336.30, a month after slumping to a two-year low of $1,321.50 on April 16, said Matthew Schilling, a commodity broker at R.J. O’Brien in Chicago. A double bottom is a chart pattern showing a drop, a rebound and then another decline approaching the previous low, usually indicating support.
“This shows that gold is probably ready to climb,” Schilling said in a telephone interview from Chicago. “The reversal was proof that we have found a bottom.”
On April 15, gold plunged 9.3 percent, the most in 33 years. A session earlier, the price slumped into a bear market as some investors lost faith in the metal as a store of value amid economic optimism, low inflation and a rally in equities.
Yesterday, gold futures for June delivery rose 1.4 percent to settle at $1,384.10 on the Comex in New York. The price gained as much as 2.4 percent after slumping 2.1 percent. Holdings in exchange-traded products backed by gold surged by $1.7 billion in 10 minutes as futures rallied.
Yesterday, assets in the SPDR Gold Trust, the biggest ETP, fell 0.7 percent to 1,031.5 metric tons, extending a slump to the lowest since 2009. Gold futures have dropped 17 percent in 2013. The price climbed in the previous 12 years.
In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index.
To contact the reporter on this story: Debarati Roy in New York at firstname.lastname@example.org
To contact the editor responsible for this story: Steve Stroth at email@example.com
To see original article CLICK HERE