Its almost comical to see the big banks coming out of the woodwork with their opinions on how high gold is going to go now.

If you are a trader (I am not) maybe that means its time for a little pullback. Certainly is alot of confidence oozing from this article.

Gold, ‘Off The Charts’, May Target $1,500: Technical Analysis

By Glenys Sim

Oct. 7 (Bloomberg) — Investors should hold onto long positions in gold as bullion has “significant upside potential” to reach as high as $1,500 an ounce, Barclays Capital said, citing trading patterns.

“Having rallied ‘off the charts’, we are left to resort to projections and extrapolated trendlines to forecast where the move might stop,” Jordan Kotick, global head of technical analysis at Barclays Capital, wrote in a note e-mailed today.

So-called trendlines are used to determine momentum and are found by connecting an asset’s high prices and low prices over a given period to form a channel.

“Channel resistance currently is at $1,370; history suggests a run at $1,500,” Kotick wrote. “Taking it a step at a time, in the coming weeks, we view consolidation above $1,020 as extremely positive, targeting $1,050 initially, and $1,120,” he added.

Gold for immediate delivery gained as much as 2.6 percent to a record $1,043.78 an ounce yesterday, and traded at $1,038.46 at 10:35 a.m. in Singapore.

“We suspect the rally is wave 3 of 5, indicating an eventual push toward the $1,120 area and potentially beyond into year end,” wrote Kotick, referring to the Elliott Wave theory, which holds that market swings follow a predictable five-stage pattern of three steps forward, two steps back.

“Initial resistance is found in the $1,050 area but that is way too conservative given the springboard that a wide 18- month range provides,” he added.

Not Unstoppable

To be sure, when compared against the major currencies, it’s clear that the gold rally is “by no means unstoppable, as none of the charts show prices concurrently pressing against their respective all-time highs,” Kotick said.

Gold priced in euros, pounds, South African rand, Australia and New Zealand dollars hit records in February as investors turned to bullion as a hedge against weakening currencies. Gold reached a peak of 783.87 euros and 692.66 pounds on Feb. 18.

“Against sterling, gold is making great strides, and against the euro it is breaking higher out of range, but against the yen it is holding in a well-defined range,” said Kotick. “These charts speak volumes: as much about currency perceptions as the value of gold.”

To contact the reporter on this story: Glenys Sim in Singapore at Gsim4@bloomberg.net

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