(Kitco News) - After falling $350 an ounce from their all-time highs, gold prices could see further weakness in the start of 2012, says Mike Zarembski, senior commodity analyst, optionsXpress. “Not only has gold begun to lose some of its ‘safe-haven’ luster, but several key technical indicators look to be pointing to even lower prices at the start of 2012,” he says. As evidence, he cites gold remains under the 200-day moving average, a strong U.S. dollar, and that the uptrend line drawn from the key October 2008 lows was broken on Thursday for the first time. “A weekly close below this trendline could lead to a bout of accelerated long liquidation selling,” he says. Assets that were being moved into gold due to concerns about Europe and its handling of the debt situation are being moved to U.S. Treasurys and German bunds. “Investors now appear more willing to earn even meager interest from owning government bonds than they do owning precious metals that not only pay no interest, but are also a cash drain, as both storage and insurance on metal holdings must be paid,” he says. The break of the October 2008 uptrend was short-lived and if that level can hold, it could spark bargain buying, he says. However, Zarembski says based on the Fibonacci retracement from the October 2008 lows, “we notice prices have not even retraced to the 38.2% level! This could potentially lead to further losses, with the 50% retracement not coming into play until the $1,300 area.” If prices break Thursday's low, the next support point is seen near the $1,478 area, with near-term resistance found at the Dec. 21 high of $1,642.10.
Source; http://www.kitco.com/reports/KitcoNewsMarketNuggets20111230.html
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