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<Research>CLSA: Gold Price Exhibits 'Blow-off & Retracement' Pattern w/ 1st Key Support at US$3,900-3,904 per Ounce
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If measured from the breakout point of gold's triangular consolidation pattern from April to September (starting from the low at the end of July) and applying the Fibonacci retracement expectations, a price of US$3,900-3,904 per ounce will represent the first key support level (38% retracement), CLSA released a research report saying. If a 50% pullback occurs, it would fall to US$3,760 per ounce, which interestingly coincides with the 50-day MA. These two levels should provide reasonable support for price stabilization. Referring to the examples of blow-off peaks in April 2006, April 2025 and July 2020, when gold traded at premiums of 36.8%, 26.28% and 25.72% relative to its 200-day MA, the broker got a sense of the magnitude of the subsequent corrections following accelerated hikes. In 2006, gold found support at its 200-day MA after dipping more than 24%. From this support level, gold built a consolidation pattern over several months, eventually breaking out in early 2007. In summary, CLSA believed that ,once gold finds support at one of the aforementioned levels between US$3,900-3,904 per ounce and US$3,500 per ounce (a retracement of 11-20% relative to the October highs), a period of consolidation should follow (and will take time). Once the consolidation pattern is established, it will present an opportunity to initiate or add to positions for the long-term bull market in gold. AASTOCKS Financial News Website: www.aastocks.com |
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