Gold Ends Longest Rally in Six Months; Silver Dips
Source: Bloomberg, Pham-Duy Nguyen (2/25/11)
"The metal's 14-day RSI topped 70, signaling a coming fall."
Political turmoil in parts of the Middle East and North Africa drove gold higher in the previous eight sessions. The metal's 14-day relative-strength index topped 70 in the past two days, a signal that prices were poised to fall. Before today, the metal climbed 6.1% this month after tumbling by that amount in January.
"Gold had a corrective move, but new buying will come in because the geopolitical instability is far from over," said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago.
Gold futures for April delivery fell $9, or 0.6%, to $1,406.80 an ounce at 9:24 a.m. on the Comex in New York. The metal headed for the fifth straight weekly gain.
Yesterday, the price reached $1,418.80, the highest since Jan. 3. On Dec. 7, the metal surged to a record $1,432.50.
"Gold may still have the potential to advance toward the Dec. 7 high with support coming from growth in investment, geopolitical factors and inflation threats," Tom Pawlicki, an analyst at MF Global Holdings Ltd. in Chicago, said in a report.