Gold prices look set to peak around USD 1,545 an ounce in the next two months, around USD 110 above Tuesday's record high, on positive chart patterns, according to Reuters analyst Wang Tao.
But after a period of consolidation, spot gold , which has rallied almost 30 percent in the past 12 months.
"Gold is expected to temporarily peak around $1,545 per ounce, based on its wave pattern and Fibonacci projection analysis," Wang Tao said.
A Fibonacci projection is a technique to forecast potential moves, based on historical chart patterns, using the 'golden ratios' first identified by the Medieval mathematician Leonardo Fibonacci.
The 161.8% Fibonacci projection level at USD 1,545 will be a strong barrier to the uptrend, based on a projection of the resistance at around USD 1,030, which effectively capped a bull run ending in March 2008 and triggered a deep correction to USD 680.80 in October of that year, coinciding with the depths of the subprime crisis.
Wang's Elliott wave analysis -- which identifies cyclical price waves which tend to have specific patterns and magnitudes - showed gold to be in Wave "C".
Wave "C"s typically are a reversal in direction of the previous wave "B" and are of greater power, rising or falling further than the first wave in a cycle "A"
"A powerful wave "C" is believed to extend its gain to USD 1,545, the 161.8% Fibonacci projection level," Wang noted.
"In the case of gold, the wave "A" started at a low of USD 34.95 in 1970, and ended at a high of USD 835 in 1980. The wave "B" developed from USD 835 to the 1999 low of USD 251.70."
** Wang Tao is a Reuters market analyst for commodities and energy technicals. The views expressed are his own.
No information in this analysis should be considered as being business, financial or legal advice. Each reader should consult his or her own professional or other advisers for business, financial or legal advice regarding the products mentioned in the analyses. **