The following is an excerpt from Frank Tang and Jan Harvey | February 22, 2012 | Reuters.com |
(Reuters) – Gold jumped to a three-month high on Wednesday, reversing early losses after bullish technical factors triggered fund buying, and platinum prices hit their highest in five months on supply worries.
Platinum outperformed gold’s 1 percent gain, rallying 2 percent on the prospect of shortage driven by a labor dispute in South Africa, the world’s top platinum producer.
Bullion turned positive late in the session and accelerated upwards once it breached technical resistance near $1,765 an ounce, an important area on price charts where two rallies failed since December.
“We are seeing all the funds step in. It (technical buying) is the only thing at the moment that we can pin it on,” said Frank McGhee, head precious metals trader at Integrated Brokerage Services LLC.
Spot gold was up 1.1 percent at $1,777.98 an ounce by 3:13 p.m. EST (2013 GMT), having earlier hit a three-month high of $1,781.40.
Rick Bensignor, chief market analyst at Merlin Securities, said gold’s rally to three-month high triggered pre-established orders to buy on the way up to stop losses as well as enter positions to capitalize on the momentum.
However, he added that gold is not far from a near-term peak between $1,780 and $1,805 an ounce.
“Gold’s counter-trend model suggests that this…is not necessarily a true breakout,” Bensignor said.
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