Price of gold to hit $1700+ in next few months -Technical analysts

Various technical analyses see gold continuing its upward path over the next few months to reach a level of $1700 and above in line with previous rallies.

Posted:  Sunday , 17 Jul 2011 

NEW YORK (Reuters) - - 
The price of gold should rise to record highs above $1,700 an ounce in the next few months based on the size of its past rallies and Fibonacci number
projections, technical analysts said.
On Friday, gold rose for a tenth straight session to above $1,590 an ounce, matching a record winning streak set four decades ago. The metal has rallied over 7 percent during the last ten days, powering bullion prices into the uncharted territory.

It hit a record of $1,594.16 an ounce on Thursday.
Tom Fitzpatrick, CitiFX's chief technical strategist, said that the next move should be similar to gold's rallies from July to December in 2010, and also from January to May this year. In both periods, the metal rose between $250 and $275 in about five months.

"We would be looking at $1,700 to 1,750 an ounce in the next two to three months," he said.
A long-term rising channel dated to the start of gold's rally back in 2008 indicated $1,660 an ounce should be the next channel-top resistance, Fitzpatrick said.

However, that resistance level is increasing at a rate of $5 weekly due to an upward momentum, so the rising channel is consistent with a target of $1,700 an ounce, Fitzpatrick said.
Another analyst also said gold is targeting at around $1,700 an ounce based on the the Fibonacci numbers, a common technical tool used to predict the relationship between percentage changes and a sequence of important numbers.
Stanley Dash, vice president of applied technical analysis, at brokerage TradeStation said gold's next target should be $1,735 an ounce based on the 138.2 percent Fibonacci extensions, looking at metal's long-term rally from its low in 2001 to its high in 2008.
"It's very hard to do any historical analysis in new price territory, so you rely on mathematical numbers and ratios," Dash said.

Also, Dash said bullion's recent upswings suggest that gold's next upward move would be a rise of 18 percent to around $1,730 an ounce, consistent with the Fibonacci analysis.
On a cautionary note, Dash said that the gold/S&P 500 ratio, which shows the metal's relative performance versus equities, has risen back to 1.2, a level where the ratio has become overextended in more than a year.