August 22, 2011
Gold’s rally to a record near $1,900 an ounce pushed the metal to overbought levels according to technical analysis tools, as economist Dennis Gartman said prices will go “parabolic.”
Bullion’s relative strength index has topped 70 since Aug. 5, a signal to some investors who study technical charts that prices may be set to decline. Gold hugged its upper Bollinger band most of this month, which may signal possible resistance, while a moving average convergence/divergence indicator and Elliot Wave patterns suggest prices are overextended, said Ross Norman, chief executive officer of London bullion brokerage Sharps Pixley Ltd.
Bullion climbed as high as $1,894.80 an ounce in London today and is up 16 percent in August, set for the best monthly gain since 1999. The metal has advanced as concern about debt crises and slower economic growth spurred investors to diversify holdings away from equities and some currencies.
The biggest gold-backed exchange-traded product surpassed its equities counterpart as the largest by market value, while bullion rose to record prices in euros, British pounds and Swiss francs.
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